Asset Protection For Your Children’s Inheritance

9-29-12 (2)– By Libby Banks, The Law Office of Libby Banks, PLLC

The revocable living trust is a great estate planning tool that can provide asset protection for your heirs.

How? By passing your assets to your beneficiaries in an irrevocable trust. With a trust, the children receive income for their health, education, maintenance and support. But because they never own the assets outright the assets cannot be reached by their creditors.

Why is this important? Let me give you an example. Let’s say Son started a business, but in the economic downturn, it failed. He filed bankruptcy. A few months later, Mom passed away, leaving him everything in an outright distribution. It was all his. Except it wasn’t his. Instead, it all went to his bankruptcy trustee.

Had Mom given him the assets in trust, he could have completed the bankruptcy without using the assets in the trust. Then, when the bankruptcy was over, the assets in the trust could have given him a fresh start.

Another benefit to this is divorce protection for a beneficiary with a rocky marriage or going through a divorce. The continuing trust assures that your beneficiary gets your money, not a divorcing spouse, or worse, their bloodline.

Planning with continuing trusts can assure that your heirs are the ones who get your inheritance and use it for their support no matter what life brings their way.

If you don’t have a revocable living trust, consider talking to your estate planning attorney or contact my office soon. Visit my website at www.libbybanks.com or call me at 602.375.6752.

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