Creating a spendthrift trust
Many people create an estate plan to provide financial support for their loved ones after they have passed away, but they want to make sure the money is used appropriately and that it lasts. The person who creates the trust is called the grantor and the beneficiary is the person who receive the trust assets.
The grantor may want to consider creating a spendthrift trust, which allows the trustee to decide how the beneficiaries can use the money. The trustee is the person who is responsible for managing the trust assets according to the grantor’s wishes.
One of the benefits of this type of trust is that the beneficiaries do not have direct access to the funds. This can be especially helpful if the person creating the trust is concerned that the beneficiaries may not be financially responsible, lack maturity or are not old enough yet to manage a large sum of money.
Another advantage is that the assets within the trust are protected from creditors. This is because the trust assets do not belong to the beneficiary. Instead, they belong to the trust.
Access to funds
The grantor can specify a certain amount of money that the beneficiary can access each year or can limit what the beneficiary can spend money on, for example. By adding these provisions to the trust, it can give the grantor peace of mind that the money will not be wasted.
If a person has questions about creating a trust or a will, an experienced estate planning attorney can provide guidance about which plan is the right fit for their circumstances.