Are you doing your estate planning? No matter which stage of life you’re currently in, estate planning is done best when you consider all your options.
For some estate planners, that can mean adding a spendthrift trust to their comprehensive estate plan. Learn more about this option below.
Who might need one?
Traditionally, these trusts aim to protect beneficiaries and heirs from suffering the consequences of their worst impulses. Spendthrift trusts can deter the worsening of problematic spending problems for those suffering from alcoholism, substance abuse and even shopping addictions or gambling.
But spendthrift trusts can do so much more. Beneficiaries don’t have to have issues with restraining their spending. They could simply be working in careers where they have higher than usual risks of litigation, e.g., the fields of law and medicine.
Spendthrift trusts have tight restrictions
As the trust funder, you can dictate the terms of the spendthrift trust, including the following:
- The frequency of disbursements
- The amounts disbursed
- What exceptions might apply
You can make the terms as loose or as restrictive as necessary. These restrictions dilute the influence of spouses or so-called friends and leave the principal untouched except by the trustee you choose to manage the funds.
Will my loved one resent these terms?
Some may. Others may actually be grateful that there is someone else in control of the funds and putting on the brakes for them. Regardless of a beneficiary’s feelings, most will accept the terms of the spendthrift trust in order to receive their inheritance. Anyone who feels so strongly about the terms is free to reject them and the money that is tied to them. However, you can rest assured that few do.
