Even though many parents assume that their grown, “responsible” child will not require protection if they receive an inheritance, there are situations where protections may be necessary. This is particularly relevant when children face specific risks like lawsuits, creditors, and reckless spending. Thankfully, there are various estate planning tools available to safeguard your assets against your child’s divorce, debts, or disability.
Using a Trust To Protect Assets and Other Belongings
One popular method parents use to safeguard their belongings against a child’s debts or other issues is establishing a trust. A trust allows for the allocation and reservation of funds for an individual while imposing specific conditions or limitations on accessing the assets.
Protection Against Creditors
You may believe that because your child is good with money, they will not have creditors. However, even a child with minimal debt could benefit from protecting their inheritance. For example, if your loved one is involved in a motor vehicle accident and is found responsible in a lawsuit, all their assets, including your belongings, could be at risk. However, if you leave your child’s inheritance in a well-drafted trust, it would be protected from such lawsuits.
Protection From Predators
If your child fully owns their inheritance, a significant other could potentially persuade your child to begin distributing these assets to them. In addition, if the child’s mental capacity declines or if they become incapacitated, they could become vulnerable to individuals looking to take advantage of their inheritance. A trust can offer protection by appointing others who can work alongside the child to make well-informed decisions.
Protection From the Child’s Own Decisions
If your child does not know how to manage money properly, it is vital to prioritize self-protection. A trust can ensure that your child’s essential needs, such as health and education, are met while preventing them from irresponsibly spending the assets they have inherited. Moreover, if the child struggles with addiction, you would not want to leave an inheritance that could be used to support their addiction. However, a trust can protect your children by safeguarding the assets from being used to fuel their addiction.
Protection From Estate Taxes
Leaving assets directly to your loved one could lead to unnecessary taxation on their estate, resulting in less inheritance for future heirs. However, by placing the assets in a trust for your child, you can keep them away from your child’s estate. This means that even if your child has a taxable estate, the trust you establish can be structured to avoid taxation. As a result, the assets can eventually be passed on to other heirs and family members without being subject to estate tax, creating a lasting legacy.
Contact Losavio & DeJean Today To Learn More About Protecting Your Belongings From Your Child’s Debts, Divorce, or Disability
Even responsible children need some type of protection against predators, creditors, and taxation. Fortunately, creating a well-prepared trust can provide this protection. More importantly, you do not have to prepare this trust on your own. When you work with an experienced estate planning attorney, these legal professionals can help you plan how to leave your assets to future generations in a way that meets your goals and protects your belongings.
At Losavio & DeJean, our lawyers are here to protect you and your legacy by helping you take advantage of estate planning tools such as trusts, a Last Will and Testament, and power of attorney. That is why if you want to learn more about protecting your belongings against your child’s divorce, debts, or disability, contact Losavio & DeJean, LLC today and speak with one of our experienced estate planning legal professionals.