One of the most important considerations for a person in Texas with significant assets is making sure that their loved ones are taken care of after their passing. In many cases, this is as simple as setting up a will or trust to efficiently transfer your assets to your heirs. But sometimes, the situation is more complicated.
Estate planning is a little more tricky when you suspect that your beneficiaries might not act responsibly with their inheritance, or you suspect someone may take advantage of them. A spendthrift trust is a way to protect your heirs from those scenarios.
How a spendthrift trust works
Rather than leaving your money and assets to your heirs directly and completely after your passing, a spendthrift trust establishes a financial plan in which the money is allocated over time. This sort of trust prevents your heirs from squandering the money in a short period.
A spendthrift trust appoints a trustee to oversee the trust, and the details in the trust will stipulate the time periods over which the assets are allocated. When assets are allocated can be based on the age of your heirs or the stages in their lives, such as graduation from college, marriage and purchasing a home.
Important considerations with a spendthrift trust
If you’re going to establish a spendthrift trust, it’s crucial that you have someone you can rely upon to be the trustee. In many spendthrift trust, the trustee has some discretion as to how to allocate assets. Make sure you’ve selected someone you can trust and who understands your plan for passing on your assets to your heirs.
Keep in mind that a spendthrift trust does require a bit more maintenance. Because of this, the trust requires more financial upkeep. There are tax implications to maintaining a spendthrift trust, so make sure you’ve allocated funds appropriately.
If you believe your heirs need this sort of trust, look into the details of how to set up a spendthrift trust to safeguard your inheritance. Once you have set up the trust, you will have peace of mind knowing your heirs will be cared for when you leave this world.