Good Plans Make Good Sense

Trust law enables us to create legal structures that make it so our assets stay in our family protected for generations. How? Let’s assume Jack and Jill have three children whose names are Peter, Paul, and Mary. Peter is married to Jessica. They have one child whose name is Alfred. Paul is a single successful surgeon. As a surgeon he has substantial exposure to malpractice claims. Mary is single and is receiving government benefits. Jack has one child from a prior marriage named Sammie.

QUESTIONS:

1. Can Jack and Jill make sure Jessica will not get any of what they leave to Peter?
2. Can Jack and Jill benefit Mary and also protect her benefits?
3. Can Jack and Jill make sure whatever Paul may receive will be protected from a medical malpractice claim if he were sued?
4. Can Jack and Jill make sure that if something happened to Peter, his share would be used for the health, education, maintenance and support of Alfred?
5. Can Jack make sure that when he and Jill are both gone, that Sammie will receive 20% of the assets?

The answer to each of the above questions is “Yes.”.
With some basic planning and a close look at the assets, Jack and Jill can accomplish all of the above.

With some variation depending on unique circumstances and unique individual directions, the hypothetical Jack and Jill should leave half their assets to each other protected in trust and direct the remainder to their children in trusts so the assets are protected and stay in the family. Each of them should have updated South Carolina powers of attorney for health and for finances. This will avoid guardianship and conservatorship proceedings (which can be expensive) if Jack or Jill become incapacitated for any reason. Each should create a trust where they remain the trustees and beneficiaries at the outset. With the counsel of their lawyer, they should re-title assets into their trusts. The lawyer can help with who’s trust assets should go into which trust and why? When this is done, if the trust papers spell out the terms of a family asset protection trust and trusts for the children, then their plan can work wonders to protect their assets and preserve their legacy.

In a nutshell, such a plan will:

(1) protect half their assets from lawsuits during the surviving spouse’s over life,
(2) leave assets to their children in a sort of “lock box” (a trust) where they have total control use and benefit of the trust funds BUT that will be protected if they become divorced or get sued for some other reason,
(3) ensure that when a child passes, it will go to their children (Jack and Jill’s lineal blood descendants) and not the in law spouse.
Now, that’s good planning and good plans make good sense.

Contributed by
Mark F. Winn, J.D., Master of Laws, LL.M. in Estate Planning, is a local tax, asset protection and estate planning attorney.