An experienced estate planning attorney can help you make plans to thoughtfully provide for the people you care about. Sometimes this means more than simply accounting for who will inherit from you. You need to think about how they will receive what you leave them. Estate planning presents the opportunity to think about the particular needs of the people who will inherit from you and to thoughtfully plan to provide them the structure, protection and benefits which can either only or most easily be provided through the legal arrangements you create as part of your plan. One example is a situation where your family members or friends who you want to leave money to are financially irresponsible.
It is natural to worry that a loved one will squander an inheritance you provide. If you’re like most people, your idea is that the money and property you worked so hard to acquire and preserve — if there is any remaining after your life — will go to improve the quality of life of your family member or friends your leave behind. Where those people you care about are not as responsible as you would like, this intent can be defeated. Fortunately, there are solutions available to you to help ensure that the inheritance you offer actually can last a long time and be managed responsibly. As Chapel Hill estate planning attorneys, the team at Clarity Legal Group® can help you define and built a structure for leaving money to a loved one who isn’t financially savvy.
What to Do About Leaving Money to a Financially Irresponsible Heir
If any of your potential heirs or beneficiaries are irresponsible with money, you may worry that they will declare bankruptcy and lose the assets you’ve left them, or you may worry that creditors could end up making claims against them and taking the wealth you have provided. You may also have concerns that they will simply spend an inheritance quickly on frivolous things and then be left without the security which might really improve the quality of their lives.
At Clarity Legal Group®, we think you haven’t had competent planning if you have not at least considered providing asset protection for your beneficiaries, even if they do not have a history of mismanaging money. When it comes to those who are financially irresponsible, you can leave a financial legacy without leaving that person in charge of managing the money. You can even avoid legally transferring ownership to that person so you can protect the assets from being lost to creditors, the IRS, bankruptcy, or even a divorcing spouse.
One of the best approaches you can take to protect an inheritance that you leave to a financially irresponsible heir is to use a trust to provide the inheritance. With a trust, you can make your spendthrift loved one the beneficiary but the trust will own the assets. The management and use of the assets for your loved one can be handled by a responsible person you have chosen as Trustee, who will make decisions based upon instructions and guidance you have provided in advance, as part of your estate planning.
The responsible person who you designate as the trustee will actually manage the assets that the trust owns, and will make sure the money is invested properly and not squandered on irresponsible purchases. You can create a trust document that provides very specific details for when and how money and property held within the trust are used for your financially irresponsible loved one so you can make sure that the money isn’t wasted.
At Clarity Legal Group®, our estate planning attorneys will walk you through your options for defining a trust which is customized to the particular needs of the person you are leaving behind. We’ll help you make smart choices in selecting the trustee to manage the wealth, will coach you through the options for defining the terms of the trust, and then create the trust and make sure you transfer the assets into the trust properly so the trust becomes the new legal owner. We will also help you build provisions into the trust to allow for modifications to the workings of the trust in the event the law or the circumstances of your beneficiary or trustee change, even after your death. Our firm can help you with all of these steps so you can create the trust you need to protect an inheritance provided to a financially irresponsible relative or friend.
Getting Help from Chapel Hill Estate Planning Attorneys
Chapel Hill estate planning attorneys at Clarity Legal Group® can provide assistance using appropriate estate planning tools to address whatever issues or needs your loved ones experience. We understand that making plans to ensure that an inheritance does good for your family can be difficult — but it is one of the most important things that you will do.
To find out more about the many ways in which our firm can help you to create a comprehensive estate plan that best provides for the people in your life, give us a call at 919-484-0012 or contact us online today.
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