Trusts are available to meet unique family problems

| Feb 22, 2021 | Estate Planning |

In general, many people, attorneys and otherwise, promote the use of trusts to avoid probate and, possibly, save on taxes. Trusts do offer families living in the Sherman area other advantages as well.

For example, Texans can use certain types of trusts to address difficult family situations. These trusts can allow a person to make sure that a loved one receives some of the person’s property without running risks of financial or other problems down the road.

A spendthrift trust can protect an immature loved one from poor decisions

For example, a spendthrift trust is set up in a way where a person will only receive money from the trust in definite, limited amounts. The person will not have the ability to take an advance on the amount to which she is entitled.

Likewise, creditors, including ex-spouses, may not lay a claim on those funds that remain in the trust until the person receives a distribution.

The idea behind a spendthrift trust is that it prevents a person from spending all of their money at once, whether because of simple immaturity or as a consequence of an addiction or other issue. It also ensures that a person’s creditors will not get the lion’s share of an inheritance.

Special needs trusts can serve to protect a disabled person’s benefits

While not because of irresponsible spending, a person with special needs in many cases would also be harmed were he to receive too much property all at once.

The reason is that this person may rely on government benefits which have strict income and asset limits. If such is the case, receiving a gift or bequest could do more harm than good if it meant the person would no longer qualify for government programs.

A special needs trust is designed to provide for a disabled person’s necessities, like medical care, necessary personal care and transportation designed for those with physical or mental challenges. If properly drafted, the intended beneficiary can receive financial assistance from her family without losing critical government assistance.