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Why You Should Put Assets in Trust for Your Children

January 12, 2011 by John Potter

At one time, many people believed that leaving your assets in trust for your children was trying to maintain control from the grave. This attitude has shifted as more people have realized that a trust may be necessary to protect one’s children and grandchildren. Sometimes, it may be in a child’s best interest to not have complete access to the inheritance that was left to them.

Here are a few reasons why you might want to consider putting your children’s inheritance into a trust:

One of the most important reasons to put your child’s inheritance into a trust is to protect it from divorce and creditors. When someone divorces, inherited money that is held in trust is not considered to be part of the marital estate. It is a sad fact that divorce rates are very high, and statistically, when your child gets married there is about a 50% chance that the child will eventually divorce. If this happens, you will want your child’s inheritance preserved for the child, and for your grandchildren. Money held in trust may also be shielded from to creditors so it will be safe, even if your child runs into financial problems later in life.

Placing your child’s inheritance in a trust is also a method of keeping it in your family. When assets are in trust and your child cannot take them out and dispose of them, they also cannot put their spouse’s name on the assets. Although in some cases having the spouse’s name on assets jointly with your child may not be a bad idea, keep in mind that if they divorce, the spouse may have some claim to the assets. In addition to this, if your child dies and the spouse remarries, the new spouse could have claim to the assets, and not your grandchildren.

Another advantage of putting an inheritance in trust is that you can appoint a trustee to administer the trust and ensure that the assets are properly invested, as well as providing a controlled distribution of funds to the trust’s beneficiaries. This is especially useful if you feel that your child may not be capable of investing responsibly if the money is left directly to him or her. You can include terms in the trust call for distributions after they reach a certain age, or have graduated from high school, college etc.

There are many benefits to leaving your children’s inheritance in a trust, but the main benefit is that it can provide protection and security for your children.

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John Potter

Latest posts by John Potter (see all)

  • What Type of Trust Protects Assets? - February 20, 2019
  • Our Ashland Trust Attorney Explains How a QTIP Trust Works - February 18, 2019
  • What Happens If I Leave Assets Out of My Living Trust? - February 15, 2019

Filed Under: Trusts Tagged With: Estate Planning, Wills and Trusts

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Testimonials

John Potter has been a real pleasure to work with. He is very knowledgeable and explains things in a very simplistic manner so the average person can understand how/why the laws are written. He is very attentive and asks questions in such a way that not only helps him understand your goals, but also helps you think about what type of goals and expectations you should be considering. Exemplary client service.
David J.
Overall The Potter Firm was very professional. They took what could of been a very complicated process and were able to break it down so it was a lot easier to understand. We are confident we now have made the right decisions in our estate planning. Good firm to work with.
DKS & KMS
My husband and I selected Ms. Potter to assist with our small business. She responsive and attentive every time I have a question or need assistance, and is extremely knowledgeable and able to answer any legal question I have had. I know I can count on Ms. Potter for all of my business legal needs and I would highly recommend her to anyone needing legal assistance with such.
Jillian

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Phone: (606) 324-5516
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