Asset Protection Planning for your Beneficiaries Part 1

Why Does Someone Create an Estate Plan?

As discussed elsewhere on my website and in my Blog, I have mentioned why people create Estate Plans. They do so for the benefits that Estate Planning provides. There are many benefits to creating a Revocable Living Trust, but we can condense them to four reasons or categories. These reasons are:

  • To control your Estate while you are alive.
  • To provide for yourself and the loved ones who depend on you.
  • To give the property you wish to give to those beneficiaries you select.
  • To minimize professional fees, court costs, taxes, and other costs.

It is the third reason that we will be focusing on in this Blog. We will discuss methods of distributing your Estate and how you may protect the beneficiary’s inheritance from such things as creditors, divorce, and even from himself or herself.

We Want to Enhance Our Kids Lives

When we give a gift of our property to a beneficiary, usually our children, we want to enhance their life, and maintain harmony. The same is true even if the beneficiary is not our child.

The ultimate question that the Settlor (the person that creates the Trust) must answer is – do you want to, in some way, protect or control how your child receives his or her inheritance? Allow me to guide you to the answer to that question. First, consider what your child would receive if you were to die today. Next, tell me what it is that you’d like them to do with that inheritance. Is it that you would like them to pay bills, take a family vacation, or educate their children? So if you were to give them the inheritance outright, what do you think they would actually do with the money? Do you think they would be responsible, or do you think they may squander it in some way or buy an unnecessarily big car or big house? Lastly, ask yourself how you feel about your answers. Some people will want to protect their kid’s inheritance in some way, and others may not. The fact is some people are always responsible with money, some are not, and some land in the middle.

Another thing to consider is that an outright gift does not necessarily mean “I love you”. A mentor and colleague of mine tells a story of how he received an inheritance from his mother. He put the money in the bank and over time he thought how it would have been nice to have used the money in remembrance of his mother, instead of just commingling the money with his own. He was rather emotional in relaying the story and I could tell he wishes he or his mother had thought it through enough to put language in the Trust instrument indicating his mother’s wishes for such a use. This man is an accomplished Estate Planning attorney, so it can happen to anybody.

There are methods and degrees with which to control or recommend how the gift of an inheritance is to be used. To do so is not to say “I don’t trust you”, but it is a way of saying “I love you, and because I love you I am always going to try to protect you”.

Please see Part 2 of this blog for the remainder of this discussion on Asset Protection.

My most important job is to listen to your wishes first, then suggest solutions. Call me today and let’s start planning!

Thanks for reading!

Dan Powell
619-980-2297

****Reminder****

Just like my website, nothing in this blog is intended as legal advice. If you need legal advice, contact an attorney licensed to practice in your jurisdiction. I am licensed to practice law in California. Further, please remember that I speak in generalities in my blog (and on my website). There are so many different factors that can contribute and completely change the outcome that it would not be practical to discuss all of them here. This is why I speak in generalities. Thanks again for reading.

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This document is for informational purposes only. Nothing in this is to be considered legal advice. Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship. If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction. I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information.

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