Keeping the legacy within the family is one of the goals of an effective estate plan of many people in Kennett Square, Pennsylvania. However, it may be difficult to pass assets along to the next generation if the heirs are not yet capable of managing them.
Once the testator dies, distributing property to minor children is not possible until they turn 18. Until that time, the assets will be held in a conservatorship appointed by the court. However, once the child reaches the age of majority, it does not necessarily mean that the child is capable of managing the estate. By setting up a trust, the creator of the trust can be assured that someone is looking after the estate and distributing the proceeds to the beneficiaries of the trust in portions.
The trust can also protect the assets before distribution because technically, the beneficiaries do not yet own the assets. For instance, if the beneficiary is in debt, creditors cannot garnish the assets in the trust. Another instance where the assets are protected is if a beneficiary divorces; the property in the trust is not subject to property division. Additionally, in the case of lifetime trusts, the beneficiaries can be assigned as co-trustees and assign another generation to look after the estate.
The right estate planning tool does not only ease the distribution of assets, it also allows flexibility in case there are life changes that may affect it. An estate owner can use different trusts in an estate plan. However, assigning a trustee is critical. A trustee can be either a person or an organization that can make sound financial decisions. Working closely with an estate planner can be an ideal fix if the estate owner is not familiar with the laws of inheritance.
Source: The Times Herald, “Matt Wallace: How to leave an inheritance to a child or other beneficiary,” Matthew Wallace, Dec. 21, 2013