Parents work hard with their kids in mind. They want to provide them with a great childhood and set them up to prosper in their future. A lucky parent will have their children outlive them, and more often than not, a parent will want to provide for their children even after they are gone.
When they were children, parents did not just provide without rules or restrictions. There were curfews, chores, discipline, guidance, support, encouragement and much more involved. So why can't the money we leave our children come with similar parental controls?
The truth is that it can. Trusts are a great way to help provide for kids with some parental guidance even when the parent is no longer physically there. There are a wide variety of trusts that act as helpful tools with more benefits than just avoiding lengthy probate.
For instance, what if a parent has a child with money management issues? Do they make poor spending choices? What if I want to "earmark" the money for a specific purpose? Trusts have an answer for all for all of these questions.
The terms of a trust can provide both control and protection. An educational trust can restrict the money from being used on a vacation or for clothes. A spendthrift provision can help protect assets from creditors.
These trusts must be executed properly. A spendthrift provision that is not adequately drafted provides little protection from creditor claims, thus defeating the purpose of the provision entirely. Attorneys with a focus on estate planning can ensure that the trust not only satisfies a testator's wishes but ensures that they are carried out during administration of the trust.
Source: Marco News, "It's The Law: Spendthrift trusts offer protection," William Morris, June 21, 2013