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Trusts you can use to make your wealth last

On Behalf of | Jan 29, 2024 | Estate Planning |

You certainly hope that your named heirs and beneficiaries will be good stewards of the assets they receive, but the truth of the matter is that newfound wealth can be easily mismanaged. Therefore, even though you’ve spent decades building your wealth, it could all be dashed away quickly once it’s passed down to your loved ones unless you take action to protect it.

If that has you concerned, take a moment to realize that you can control the estate planning process in a way that protects your wealth in the long-term. This will require some work on your part, of course, starting with understanding your options for ensuring asset longevity.

How can you ensure that your estate assets last?

You have a plethora of estate planning strategies at your disposal. By choosing those planning vehicles that best suit your needs, you can better ensure that your assets last as long as you want them to. Here are some of the estate planning options that might give your assets the legs you want:

  • Incentive trust: With this type of trust, you condition the release of trust assets on the completion of an event. You can be creative here, too. The event that you choose can include getting married, graduating from college, holding a job for a specified period of time, and even completing some sort of treatment.
  • Spendthrift trust: This trust restricts the release of trust assets so that a named beneficiary can’t get their hands on the bulk of the trust’s assets all at once. Instead, assets are released incrementally. This prevents the beneficiary from squandering away their inheritance, and the wealth that remains in the trust is protected from the reach of your beneficiary’s creditors.
  • Discretionary trust: This trust is similar to a spendthrift trust except that the amount and duration of distribution rests solely at the discretion of the appointed trustee. When choosing this estate planning tool, then, you should be sure you name someone you trust to ensure that your wealth lasts a while.
  • Remainder trust: By utilizing a remainder trust, you can support one individual for the duration of their lifetime while specifying where the remainder of the trust’s wealth will be distributed thereafter. For example, you could support your child for their lifetime with the remainder being passed to a grandchild or even a charitable organization.
  • Dynasty trust: This type of irrevocable trust is structured to ensure that your wealth lasts for a significant time, sometimes even indefinitely. If you have the wealth to support one of these trusts, then it’s a strong option for supporting future generations while minimizing the impact of estate taxes.
  • Generation-skipping trust: As its name implies, this trust allows you to give wealth directly to your grandchildren. This ensures that they’re supported as you see fit while also giving your assets more longevity.

What estate planning strategy is best for you?

The estate planning process is customizable to fit your vision of the future. The problem is that most people don’t take the time to learn about what the estate planning process can do for them and their loved ones.

Don’t let that happen to you. We think that once you educate yourself on the strategies available to you and choose the one that’s best for your circumstances, you’ll breathe a sigh of relief knowing that your loved ones and your hard-earned wealth are well taken care of. But that’s going to require you to be proactive, which is why now is the time to start thinking about the best path forward.