Estate Planning: Giving Your Children the Protection of a Living Trust
The protection of a living trust secures your caring influence for your family, even after you’re gone.
Think about it: you spend your entire life earning your money and protecting it. You are careful with living expenses and purchases. You invest cautiously. And once you and your spouse pass away, your children receive everything in one lump sum. But is this the best course of action?
It doesn’t matter whether the amount is $10,000 or $10 million. There are several scenarios to consider in choosing a lump sum inheritance:
- Are your children currently financially responsible?
- Would the lump sum be at risk of a lawsuit? In a divorce, the ex-spouse can end up with the assets if they were originally placed in a joint account.
- Would the inheritance have the unintended effect of encouraging unproductivity?
- If your children are already financially secure, you may want to provide for your grandchildren instead
- The tax burden of the inheritance would be left to your children as the assets are included in their estates
Give your children the protection of a living trust
A living trust can include your specific instructions. For example, you can give the Trustee discretion to operate within your expressed guidelines. The Trustee can decide when to distribute income or principal, according to your guidelines.
You may decide to provide periodic income for your children as another example. This can go towards helping them start a new business, buy a home, or pay for your grandchildren’s education. You can instruct the Trustee to match your children’s income to encourage their productivity. Or you can supplement their incomes if they choose to do worthwhile but lower-paying work.
A living trust extends your influence and care for your children even after you’re gone. It lets you provide values, guidance, and a continuing example.