Planning for the best way to pass on your accumulated life savings and other assets is one of the major focus of estate planning. Practically all of my clients want to pass on at least a portion of their estates to their children.  The question we discuss is how to do so wisely, so that our children will receive the maximum benefit from their inheritance.  

 

When parents first start thinking about how to plan, often the  first thought is "just leave it to the kids, they'll know what to do with it". That feeling often comes from not knowing what the full range of alternatives might be, and wondering whether an inheritance other than an outright distribution would be "control from the grave". 
 
Unfortunately, statistics show that our children have a one in two chance of experiencing either a divorce or a bankruptcy in their lifetime. This means there is a good chance that the inheritance your son or daughter receives will be at risk and may end up with the "in-laws" instead of your children and grandchildren. Luckily, we can avoid these problems by using modern estate planning approaches. The law in most states provides that you cannot establish a trust to protect your own assets from creditors. However, a trust established by you can provide asset protection to your beneficiaries and is not difficult to create.
 
Here's an example of how it can work for a child who is very competent and  financially astute. Instead of giving your daughter, Jenna her inheritance outright, consider leaving it to her in the form of a beneficiary controlled trust. This will allow her to protect it from outside forces, such as divorce and bankruptcy, while giving her access to and control over the money. Jenna would gain additional protection from creditors by naming a Cotrustee to serve along with her and because she has the ability to name (and even replace) the Cotrustee, she has the ultimate control.
 
From a beneficiary's point of view, receiving an inheritance this way is better than an outright distribution. In short, we can easily bullet proof our children's inheritance and leave them a much more valuable legacy. If you would like more information about this important planning options, just give us a call or send us an email.