The Purpose of a Good Estate Plan
The purpose of a good estate plan is to give you peace of mind and to provide maximum benefit and protection to your loved ones. In this regard, an estate plan should:
If, for instance, you direct that assets are to go to a loved one (a spouse or a child) free of trust, this may be effective and efficient, but it provides no asset or creditor protection. So, how do you provide maximum asset and future creditor protection? ANSWER: Leave your assets to loved ones “in trust”. A trust is an arrangement where there is a legal owner (a trustee), a beneficial owner (the beneficiary) and assets. The terms of such a trust (terms of which are embedded within your revocable trust) usually dictate the beneficiary can get all the income annually and as much of the principal as they need for their health and maintenance. This kind of trust may be referred to as a “beneficiary controlled spendthrift trusts” (BCST’s). Your loved one can be the trustee and the initial beneficiary. If we state that the right of the beneficiary shall not be subject to the claims of their creditors, and that it shall not be pledged anticipated or assigned, then we have effectively protected those assets from a myriad of threats, namely, loss in a lawsuit such as a car accident, loss in a divorce due to equitable distribution.
In other words, doing this can provide your loved one with the maximum benefit and protection the law affords. It is the legal equivalent of having your cake and being able to eat it too. Given that 50% of marriages today end in divorce, it is wise to ensure assets left to loved ones will NOT be subject to loss in the face of a divorce. Furthermore, leaving assets “in trust” for loved ones allows you to direct that when a child passes, his or her share will then go to the grandchildren, not the in-law spouse. This allows you to sleep better at night knowing that your plan will be effective, efficient, will provide your loved ones with the maximum asset and future creditor protection the law allows. To take steps now to guarantee your assets will stay in your family bloodline will give you peace of mind.