Meinzer Law Firm, PC

Is a spendthrift trust right for your estate plan?

Most Californians who engage in estate planning do so in order to protect their loved ones' financial well-being as fully as possible. These people also tend to hope that their estate will be well protected, ensuring long-term viability and thereby creating a sense that their legacy will be established.

This is certainly attainable when the proper estate planning tools are utilized, but individuals need to be familiar with their estate planning options to ensure that they are making the informed decisions that further the interest of their estate and their loved ones.

One estate planning tool available to Californians is the spendthrift trust. This type of trust allows an individual to place assets into the trust with instructions to disperse specified payment amounts to a named beneficiary during the course of identified time periods. When looked at from far away, this type of trust is meant to protect assets from a beneficiary's spending habits.

This type of trust can thus be a great way to protect both an estate's assets and a loved one's financial well-being because it can provide consistent payments to a beneficiary while at the same time ensuring that the trust's assets aren't quickly depleted.

However, when creating a spendthrift trust, an estate planner has to have a deep understanding of his or her assets as well as the named beneficiary. Far too often these trusts allow for dispersals that are too large or too frequent, which can be problematic.

To strike the right balance, estate planners may want to discuss these matters with a legal professional who knows how to artfully craft spendthrift trusts to further his or her client's interests. For some, this process may reveal that an option better than a spendthrift trust exists. But that's what's great about estate planning, the fact that the process can be customized to fit a planner's needs.

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