Guardians for Your Young Children
Serving as “Back-Up” Parents for minor children
Minor children need parents, and if you pass away before your youngest child is 18, the law requires that a “back-up” parent be appointed. This surrogate parent is referred to as a “guardian” – responsible for the care nurturing, education and discipline of your child. Your estate plan should nominate your desired guardian and provide clear instructions as to the ways you want your children to be raised in your absence.
Protection for heirs who lock financial responsibility
Minor children and many young adults are simply incapable of handling the outright distribution of their inheritance. Because they lack the ability to make appropriate decisions regarding the investment and spending of their inheritance, parents routinely establish trusts to protect minors and young adults “from themselves.” Only after the parents believe that their children will be financially mature will the trust be “lifted” and the children given unfettered access and control.
Incentive Trusts (example)
Instilling values and providing incentives for heirs
Often parents desire to establish trusts designed to instill values and to provide incentives for accomplishment. These types of trusts are usually custom-drafted to allow the parents to express their most sincere wishes. Conditions are placed on the distribution of the inheritance.
Common conditions include educational goals, career goals and social goals.
Conversely, “disincentive trusts” can focus on eliminating known problems like drug and alcohol abuse, and risky behaviors.
Inheritance Protection Trusts
All the benefits, Plus Asset protection
Inheritance Protection Trusts can provide all of the benefits of the other identified trusts. But they can do much more. Even when the “conditions” are met (e.g., age, maturity, accomplishments,) the trusts continues. The purpose of this continuation is not to “govern” the beneficiary – but to protect the inheritance from “creditors and predators.” These trusts can be designed to safeguard inheritances from divorces, judgments, bankruptcies, creditors, etc.