If you are fortunate enough to leave an inheritance of any size to your children in Illinois, you may decide to ensure they do not squander it. If it contains significant assets, proper preparation requires more than a will. The estate planning process offers tools that ensure that you can continue providing for your beneficiaries after you pass away. At Zapolis & Associates, we often help clients create trusts that help them pass wealth to their heirs in the most beneficial way possible.
According to Kiplinger, spendthrift trusts can protect assets from misuse. Beneficiaries in the following situations are among the most common reasons for establishing these trusts:
- Financial immaturity
- Addiction issues
- Unhealthy relationships
- Too young
Most people have no experience handling large sums of money all at once. For example, lottery winners often end up filing bankruptcy, as they do not have the skills and understanding of how to manage their prize. Spendthrift trusts prevent overspending and protect assets held within them from creditors, divorces, bankruptcies and lawsuits. Due to limitations set by the language of the trust, funds are out of the reach of manipulative friends and family members.
Trustees control when and how your heirs receive money, based on your wishes. You can outline set payments or the circumstances under which he or she distributes funds. You may want funds applied directly to college costs or paid on milestone birthdays. For beneficiaries with substance abuse issues, you may require passing a drug test.
An attorney specializing in estate planning can help determine if a spendthrift trust or other financial planning instrument makes sense for your situation. Visit our webpage for more information on this topic.