In most estate plans, including some Living Trusts, beneficiaries receive their inheritance outright, either immediately after you’re gone, or over a certain period of time, or at certain ages. In other words, your assets are distributed out of your Trust right into the names of your beneficiaries. However, by "owning" their inheritance, your beneficiaries are exposed to the claims of spouses in divorce, creditors, lawsuits, the loss of government needs-based benefits and potential estate taxes when their inheritance is handed down to the next generation of beneficiaries.
The Better Way
Instead of receiving their inheritance directly, each of your beneficiaries may instead receive their inheritance in a special trust, which “springs” out of your Living Trust. This continuing "Personal Asset Trust?" can be controlled by each beneficiary in such a manner as to virtually give him or her all of the same rights as ownership, without the liability exposures ownership brings.
How the Personal Asset Trust℠ Works
The beneficiary may be his or her own initial Trustee in control of his or her own "Personal Asset Trust℠". The beneficiary may control the investing of his or her inheritance, how and when it is distributed and even who may receive it when that beneficiary passes away (if you wish, this right may be limited, such as only to your lineal descendants or blood line). The level of asset protection needed may be determined by the beneficiary after you’re gone with the advantage of "20/20 hindsight", taking into consideration the beneficiary’s circumstances existing at that time. For example, if a moderate level of protection is appropriate, an independent Co-Trustee may be brought in to co-sign on distributions. Or, if a greater level of asset protection is needed, an independent "Trust Protector" can "lockdown" the Trust even more tightly from the attack of third parties. In either case, the beneficiary may continue to indirectly control his or her inheritance, while enjoying additional asset protection
The Flexibility to Adapt
Sometimes a plan may not work as originally intended because of circumstances or events happening later that you didn’t anticipate. For example, you may have set up a restrictive trust for a beneficiary you did not feel was good at handling money or who was receiving government benefits; but later this beneficiary may prove capable of handling money or no longer require or be receiving government benefits, and the trust and its ongoing paperwork and expense may no longer be warranted. On the other hand, you may have provided for a beneficiary to receive their inheritance right away or at a certain age and when the time comes, the beneficiary is having drug or alcohol problems, or otherwise can’t properly handle his or her own affairs, or is receiving government benefits; in this case, you would want the trust to hold back the beneficiary’s distributions until the beneficiary is capable of handling matters on his or her own. Or, a lawsuit (including a divorce) may be threatened against a beneficiary and it would be advantageous to take certain protective actions. Now you can add flexibility to your Trust by permitting your Trustee to bring in the "Trust Protector" to handle these situations, just as you would have intended.
We Didn’t "Invent" It
The "Personal Asset Trustsm" is based upon over 100 years of Asset Protection Law. We have merely adapted these methods to work in tandem with your Living Trust. This Personal Asset Trust? is so unique that it is only offered by a small number of attorneys across the nation who have taken the time to study it and the expense of updating their documents to include it. All of the attorneys at Howell Kyle & Wynn, PLCC are among that number because we want our clients to have the best options possible. Call our office (601-978-1700 or 800-839-7857) to set up a convenient time to visit with our law firm so that we can discuss the inclusion of a Personal Asset Trustsm with your Living Trust.
Howell Kyle & Wynn PLLC • Post Office Box 3218 • Ridgeland, MS 39158 • Phone - (601) 978-1700 or (800) 839-7857
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