#RichLifeLawyer Show 61: How To Protect Beneficiaries In Trouble
In a perfect world everyone in our family would be perfect. But this isn’t a perfect world. Today’s episode talks about how to deal with beneficiaries in trouble (to make sure they get what they should but don’t waste what they shouldn’t)…
I’ve had countless clients come in to talk to me about estate planning that want to make sure of one thing: if there is someone in their family that has problems, whether a drug problem, an alcohol problem, a gambling problem, a relationship problem, or simply a problem with selfishness, that they don’t have the ability to waste their inheritance.
An Estate Planning Tool That Won’t Help
When most people think about estate planning they think about a will and that’s it.
But there is a big problem with a simple will, particularly when you are talking about protecting your loved ones in the future.
A will, whether simple or complex, does one thing – it directs the distribution of your assets.
What that means in simple language is this: if you distribute your assets via a will you are giving up all control over them.
For example, if you give someone $100,000 through your will, your personal representative, when the time comes, is going to cut a check to that person for $100,000 and they are going to be able to do whatever they want with it.
There are no restrictions.
There are no safeguards.
No estate planning attorney, no matter how good they are, can protect your family once you are gone.
How to Protect Beneficiaries After You’re Gone
There is a very simple way to protect beneficiaries from themselves, from outsiders, from divorce from creditors, from predators, and from everything else out there.
It’s called a trust. It exists to do exactly what you want it to do.
Trust law was first developed in the Crusades. A nobleman going off to battle would never know if he was going to return home.
He would entrust his land in the name of someone who would oversee it and manage it for his family until he returned. This evolved into today’s trust law, which has much the same concept, save the idea of you returning home.
With a trust you are placing your assets in the trust of someone else who oversees them for the benefit of your family – according to rules you set.
It is this last provision, the rules setting part, that gives your trust the ultimate power to answer the “how to protect beneficiaries” question.
With a trust you can direct your trustee, the person who controls the assets for the benefit of your family, to refuse to distribute assets if they are going to be used for illegal activity, improper activity (as described by the trust), lost to creditors, or squandered in divorce.
It is the ultimate way to protect beneficiaries.
Christopher Small is a Seattle estate planning attorney who helps people get rich and live forever. He is also the owner of CMS Law Firm LLC.
P.S. Don’t forget to check out my free ebook: “7 Estate Planning Mistakes Every Family Needs to Avoid.” It’s packed full of helpful information to help you get everything you want out of life (and after life).