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Protect your heirs with a spendthrift trust

People in California who have a large estate need to think about what may happen to their wealth upon death. Even though you may have named beneficiaries, you need to ask whether they are responsible individuals. Too many times, those who receive a lot of money from a trust do not know how to spend it wisely, and it can disappear very quickly. If this may be the case in your situation, consider setting up a spendthrift trust to protect your heirs and your wealth.

According to Forbes, a spendthrift provision provides the trustee with directions as to when and how to distribute the funds. In most cases, the named beneficiaries are given a certain amount of money to live on but they are not able to access the entire sum of the trust. These distributions may continue throughout the heir's lifetime, or the remainder of the funds may be released once the heir reaches a certain age. This helps protect the beneficiaries from spending too much too fast or using it for bad habits such as alcohol or drugs.

According to the Huffington Post, certain language needs to be used when creating a spendthrift trust. The document should include the word 'spendthrift' as well as state its intention. Specific directions need to be outlined for the trustee as to the payments and timing of the fund distribution. There should be provisions against seizure to satisfy debts of the beneficiary and against the transfer of the trust's funds by the beneficiary. Because of the specific wording, one should consult with an attorney to write up this type of trust.

 

 

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