Using Trusts for Non-tax Reasons

Trusts are often created for tax purposes, but even if taxes aren’t a concern for you, there are other reasons a trust might be beneficial.

When assets are disbursed through a will, you no longer have control over those assets, including how much heirs might spend and when. (How about a nice new Corvette?) Consider the case of a minor child who inherits a significant sum of money when a grandparent dies. After age 18, the child has total control over the inheritance. How many 18-year-olds are mature enough to handle that?

Inheritances left to a child with disabilities may disqualify him or her from receiving any sort of government assistance, including job training and transportation. And even assets left to responsible children could be drained away by creditors or scam artist, or lost in a divorce.  Assets left to a second spouse might be passed on to whomever the spouse determines as part of his or her estate plan.

All of these concerns, and more, can be addressed with a trust. You can determine to whom, when and under what conditions your precious assets will be distributed. Families may also stipulate what the money may be used for.

A trust can give significant “beyond the grave” protections, including:

  • Limiting withdrawals to a certain percentage of the value of the trust each year, thus preventing the purchase of extravagant items.
  • Providing a retirement income for your heirs.
  • Providing timed disbursements for beneficiaries, for example, at ages, 25, 30 and 35.
  • Paying only for expenses or extra items not covered by government assistance for the child with disabilities, while preserving the beneficiary’s qualification for government assistance.
  • Ensuring that your spouse is provided for while he or she is living, yet guaranteeing that the assets are then passed to your children, not someone else.
  • Protecting the inheritance that you leave to a child from divorce, predators or creditors.
  • Ensuring that your minor children or grandchildren are taken care of for life events like college.
  • Preventing waste, but providing necessities and treatment for a beneficiary with a substance abuse problem.
  • Avoiding a lengthy, expensive and public probate process after your death or if you become disabled.

Rev 08/15

The information presented on this website is general in nature and not intended to be legal advice. No attorney-client relationship will exist with Jones, Kuriloff & Sargent, LLC unless agreed to in writing. Please contact us to discuss your particular situation.