Estate Planning to Protect Your Child’s Inheritance

Every parent wants to ensure the protection of their children far into the future. If you have assets you wish to pass down to a child, you can guarantee your property will be distributed according to your wishes with a reliable estate plan. Work with an experienced estate planning lawyer in St. Louis to protect your child’s inheritance to the fullest extent of your ability.

Tax and Creditor Protection

Protecting your child’s inheritance can mean taking many different measures to prevent your hard-earned assets from being claimed by others after your death. This can include navigating tax implications and debts you may owe to avoid your assets going to creditors rather than your kids. One method to achieve this is through the use of a trust. A St. Louis trusts attorney is here to help you.

A trust can protect your child’s inheritance by bypassing the probate process. Probate is the legal process of transferring a deceased person’s property and assets to beneficiaries. It also involves settling a decedent’s outstanding taxes or other debts. This may be done by selling off assets to pay these debts.

Rather than your assets having to go through probate before they can be given to your child, you can skip this process by bequeathing your assets directly to your child via a trust. A trust will protect your assets from being given to creditors for any debts owed. The provisions of a trust can ensure that money left to a beneficiary is not spent elsewhere.

Protection From Divorce

Another potential problem you can avoid with a good estate plan is your child’s inheritance being threatened by his or her marriage ending in divorce. If your child gets divorced, his or her assets could be subject to division by the courts. With careful estate planning, you can prevent inheritance money from being included as part of your child’s marital assets.

Again, this issue can be effectively dealt with using a trust. You can hold your child’s inheritance in a trust account to keep it safe and separate from his or her spouse’s money and bank accounts. Preventing the commingling of assets can ensure that your child’s inheritance is classified as separate property – saving it from being split with an ex-spouse after a divorce.

Steps for Establishing a Trust for Your Child

First, you will need to determine which type of trust is best for your needs and purposes. There are revocable, irrevocable, testamentary, spendthrift, special needs and education trusts, among others. The most common type is a revocable living trust. This type of trust can allow you to minimize or avoid estate taxes, prevent probate court and maintain full control over who receives your assets.

An irrevocable trust is similar, except that once it goes into effect, it cannot be revoked, modified or amended without the consent of the beneficiaries. The benefit of this type of trust is that it can offer greater tax protection. Once you’ve chosen the right type of trust to protect your child’s inheritance, you must place money or property into the trust and name your child as the beneficiary.

Finally, you must name a trustee and leave written instructions on how you would like the assets to be distributed. While it is possible to name your child as both the beneficiary and the trustee, this may not be the right choice if one of your goals is to prevent the inheritance from going to your child’s spouse. To avoid spousal commingling, name a third-party trustee to manage your child’s inheritance on his or her behalf.

For an in-depth review of the best estate plan to protect your child’s inheritance based on your unique circumstances, request a free consultation with the experienced estate planning lawyers of TdD Attorneys at Law LLC in St. Louis, Missouri.