When setting up your estate plan, once you have decided who is to get what portion of your assets, you then need to consider how to distribute those assets.
Do you want to give the assets to your beneficiaries in one lump sum or distribute the assets over time? If you want to create perfect asset protection for your beneficiaries, then it may be beneficial for you to set up a lifetime trust.
A lifetime trust can apply to any trust you create and will last for the lifetime of the beneficiary or beneficiaries. It can be applied to an irrevocable trust, a revocable living trust or a testamentary trust. We recommend you think about this lifetime trust option when creating a trust, especially if the beneficiaries of the trust are children.
The great thing about a lifetime trust is that the beneficiaries of the trust will benefit from the trust for their entire lifetime.
There are 3 reasons why we consider a lifetime trust “perfect asset protection”.
1. The beneficiaries never receive an outright distribution of one lump sum during their lifetime. The money is kept in trust to ensure the beneficiaries can’t spend the money in the trust all at once. Additionally, if a beneficiary gets everything at once and then decides to deposit the money into a joint checking account with their spouse, the money then becomes community property and their spouse is entitled to half of the trust amount. We consider this type of trust a “built-in prenup” for your beneficiaries.
2. The beneficiaries of the trust can receive distributions from the trust at any time for health, education, maintenance, and support. These are very broad terms and the trustee also has discretion as to the distributions made to the beneficiaries.
3. If a beneficiary is ever sued or gets divorced, a creditor or an ex-spouse cannot get to the money in a lifetime trust.
If you are considering setting up a lifetime trust, we recommend consulting an estate planning attorney to ensure the trust is set up properly.
Do You Need The Guidance Of An Experienced Estate Planning Attorney?
If you find yourself thinking more and more about how to preserve your assets for your family you should speak with an experienced estate planning attorney as soon as possible. Contact us online or call our Dallas office directly at 214.559.7202.