What to Do When Your Heir Might Blow Their Inheritance
You have worked hard all your life to generate wealth and wish to devise your estate to your children. But what do you do when you suspect a designated beneficiary could blow their inheritance?
We all hope that our children will respect the money they inherit, but sometimes their personalities and specific circumstances make that unlikely. Here is how to handle this situation:
Spendthrift clauses can be incorporated into wills and trusts. These clauses prevent a beneficiary from transferring their interest to someone else, be it their spouse, children or other creditors.
It is important to know that once the assets are distributed—that is, once your child gets the money, house or other asset—that there is no longer control over how they use that asset. In other words, you can prevent a beneficiary from transferring their interest to someone else while the asset is still in trust. However, once it is in their hands, it is theirs to control.
Furthermore, spendthrift clauses do not entirely protect the assets from creditors. While creditors cannot compel a trustee to make a distribution, once it is distributed, the beneficiary may be required to pay creditors directly.
How to plan your estate when your beneficiaries are wasteful
While there is no fool-proof way to protect your assets against your beneficiaries’ creditors, you can protect them from spending wastefully. A spendthrift clause can help prevent your beneficiary from transferring their interest to someone else, so they cannot make a quick profit. You can also make their trust a discretionary one, so the trustee has control over what is distributed and when.
Whatever your needs, the seasoned estate planning attorneys at Baumann Kangas Estate Law in Tampa, FL can help. Call today to learn more.