Should a spendthrift trust be part of your estate?
Creating an estate plan can be challenging for anyone in Pennsylvania. You may have multiple loved ones to whom you want to leave assets after your passing. However, you may already know that some potential beneficiaries don’t spend their money wisely. For these heirs, you can consider creating a spendthrift trust.
What is a spendthrift trust?
In a spendthrift trust, the beneficiary doesn’t have direct access to the assets. One or more trustees have broad power to provide the designated heirs with funds to maintain their lifestyle. This estate planning tool is ideal for someone who wants to leave money to a very young individual or one who has shown fiscal irresponsibility in the past. By establishing this type of trust, you’ll provide for a loved one without worrying that they will waste your money.
Creating a spendthrift trust
Setting up a spendthrift trust is much like any other type of trust. You will need a trustee to ensure assets are distributed according to your wishes and one or more beneficiaries who will receive your assets. A prime benefit of a spendthrift trust is that its assets will be protected against creditors if your beneficiaries overspend. Many grantors stipulate a specific amount given annually to the beneficiary or restrict how they may spend the funds.
Giving yourself peace of mind
One of the goals of estate planning is to give yourself peace of mind, knowing that you have taken care of your loved ones. Other types of trusts can also be part of your estate, allowing you to leave money to charitable organizations, providing for a spouse after your passing, and so on. Estate plans are fluid, so if you accumulate additional assets, you can add to your estate plan with different trust types.
Other estate considerations involve creating a will, a financial power of attorney and a healthcare power of attorney if you cannot make your own decisions. In addition, you should also consider a living will that stipulates how you want to proceed with certain healthcare decisions if you can’t speak for yourself.