When thinking about how to best pass on a lifetime of accumulated assets, many Pennsylvania residents consider taking shortcuts to make things easier for their children or grandchildren to inherit property or wealth. In many cases, however, these shortcuts can result in financial devastation. When it comes to protecting assets and passing down wealth, trusts are a solid choice.
Consider, for example, a parent who wants her two adult children to inherit her home, which is fully paid off. She places the kids on the deed to the property and discusses the matter with them in depth. However, when her son later goes through a divorce, his wife is entitled to a share of his interest in the home. That can leave the son in serious financial straits. In the worst case scenario, such an event could force the sale of the home, leaving the mother with no place of residence and both children with a depleted inheritance.
Another example is a family that wants to pass on the wealth held in an investment account to their daughter. They complete the paperwork to add their daughter to the account, and all goes well for a number of years. When the daughter runs into serious tax problems and is taken to court, the government can seize the assets that are held jointly with her parents. That can demolish wealth that took decades to build and leave everyone involved in a difficult position.
Creating a trust takes a little more time, effort and money than many do-it-yourself estate planning options. However, the end result is a plan that serves to protect the interests of all involved. It also creates a strong level of protection for those assets and can stop seizure through legal action, divorce or taxation. Trusts are one of the most commonly chosen estate planning options among Pennsylvania residents because they offer a powerful means of shielding wealth for future generations.
Source: thetimesherald.com, "Wallace: Why haven't you done your estate plan?", Matthew Wallace, July 10, 2016