Last column I explained how a trust can help protect your spouse, particularly should s/he have serious health challenges and you are no longer there to ensure your assets are used for his or her care.
There are also many ways in which a trust can help protect your children from the complications of life they may face. One of the most stark examples was that of a widowed client. When we met for her estate planning, she was terribly worried that her estate plan would actually hurt — rather than help — one of her two children.
One of her children struggled with a serious addiction to drugs. A Will would allow her to pass on part of her estate to this child, but it would be powerless to control what he did with the money after he received it. Obviously, she was concerned that her estate might be used to actually feed his drug addiction. She asked if there was a way she could ensure the money was used for his benefit rather than his addiction.
The answer was yes.
Instead of using a Will, we created a trust. The trust provided that, on her death, this child’s share of the estate was to remain in his mother’s trust. Someone his mother designated (and trusted) was then instructed to pay her son’s (appropriate) expenses directly. The money never did go directly to him, but still had to be used for his benefit. With this money, rent, utilities, etc. were paid directly, rather than turned over to the son to pay. The trust allowed my client to maintain control over how her money was used, even after her passing. This is something a Will could not do.
There are many other circumstances in which a trust can provide great protection. I will discuss those next column.
© 2016 Steven J Wright