After years of hard work and preserving your assets, you’re ready to decide who will receive your belongings. Although you may be able to control the gifts you make to your children and grandchildren while you’re living, you may have come to recognize there are limits to your influence.

One thing to carefully consider is that your plans for passing money onto the next generation may never be realized for various reason. Some include: 

  • Your spouse remarries, unwisely;
  • An unanticipated or unforeseen tax consequence drains the estate;
  • A chronic illness or lengthy nursing home stay disrupts the plan;
  • Financial mismanagement or irresponsible spending
  • An aggressive creditor, fraud, or some other unfortunate act

 

When leaving an inheritance to the next generation, it is common to create a staggard plan of giving such as one-third at age 21, one-third at age 25, and the rest at age 30, or outright gifting with no strings attached. This approach seems straightforward and therefore sensible. However, staggered or outright distributions are less than ideal because they leave your heirs’ inheritance vulnerable to creditors, predators, and interference from courts. 

So, what is the preferable solution?

Here’s one powerful answer: Leave an inheritance in a discretionary lifetime trust, rather than outright or staggered.

What is a discretionary trust?

This type of trust allows you pass assets along to beneficiaries now, and after your passing. You give your Trustee discretion over how and when beneficiaries may receive your trust assets. Your trust instructions can include acceptable and unacceptable uses of funds.

For instance, acceptable uses can include funds for a wedding, down payment on a new home, graduate school, or seed money for a business. Trust funds can be restricted for ideas inconsistent with your trust terms. With proper planning, trust funds, can remain intact and last for generations.

How Does This Tool Shield an Inheritance? 

Discretionary lifetime trusts protect the inheritance by providing a protective layer against various situations that can occur with your beneficiary, such as a vengeful ex-spouse, business partner, unshakeable creditor, or lawsuit. Of course, no wall is impenetrable, but this one can be made quite strong.

Another major benefit is that you can direct where remaining trust assets will go, after a beneficiary’s passing.  For instance, the remainder can pass to a grandchild, a sibling, or charitable organization, if you wish.

You can also maintain your standards by imposing them as conditions on receiving trust funds. If you have a child who is not responsible financially, the Trustee can be given the discretion to deny or limit the flow of trust funds.

This type of trust has helped protect countless people across the entire wealth spectrum, from the modest to the wealthier. It may be a good solution for your family as well.

 Please call us today with your questions at 718-514-7575. Setting up a smooth inheritance isn’t as hard as you might think.


Monet Binder, Esq., has her practice in Queens, dedicated to protecting families, their legacies, and values. All halachic documents are approved by the Bais Havaad Halacha Center in Lakewood, under the direction of Rabbi Dovid Grossman and the guidance of Harav Shmuel Kaminetsky, shlita, as well as other leading halachic authorities. To learn more about how a power of attorney can help you, you can send her an email at This email address is being protected from spambots. You need JavaScript enabled to view it.  or call 718-514-7575.

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