Legacy planning is an extremely thoughtful endeavor because in addition to simply managing financial transfers you are also taking stock of the entirety of the impact you have had on the world as you are passing through. One of the things that many people recognize in fullness while ruminating on this matter is the role that they have played in the lives of their family members.
Most of us can recall countless times when our children, grandchildren and others have come to us for advice, elder guidance, and sometimes, financial assistance. When you realize that before very long you’re not going to be there to provide this foundation of support you oftentimes see estate planning and its purpose in a different light than you may have 10 or 20 years previously. The inheritances that your loved ones receive are going to be your final act of giving.
This being the case, if all or part of a loved one’s inheritance was swallowed up by a lawsuit judgment or via a contested divorce proceeding this family member could be placed in a very precarious financial position. This is why asset protection is something to keep in mind when you’re planning your estate, and many people choose to protect assets that they are transferring to their loved ones through the of the creation of lifetime trusts.
With these trusts your heir is the beneficiary but he or she does not legally own the assets that have been used to fund the trust. Therefore, claimants seeking redress cannot target those resources. You elucidate the terms of the distributions from the trust to the beneficiary when you’re drawing up the terms, and you appoint a trustee to carry out your wishes. In this manner the assets are safe from those who would seek to attach them, and the beneficiary is also protected from his or her own poor financial decisions because the trust is ultimately being managed by the trustee.