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Trusts better robust than bust
- 1. Trusts – Better Robust Than Bust Not all trusts are created equal, especially when it comes to protection in a divorce. Place logo or logotype here, otherwise delete this. VIDEO LAW OFFICE OF DAVID PARKER BLOG PLLC
- 2. The point of leaving money in a trust is to ensure that it’s available to the beneficiary at the right time, with maximum tax deferral, and protected from both creditors and the beneficary’s mishandling of the assets (particularly if the beneficiary is a minor). One common reason for leaving funds in a trust is to protect them in case the beneficiary divorces, but not all trusts provide adequate protection from asset loss in divorce. A poorly-designed trust is often the weak link in NY estate planning. Place logo or logotype here, otherwise delete this. VIDEO LAW OFFICE OF DAVID PARKER BLOG PLLC www.parkertrustlaw.com
- 3. According to a recent article in Financial Planning, The two most common mistakes made about trusts is to keep them simple and to keep control in the hands of the beneficiary. A typical trust will distribute the funds to the beneficiary free and clear upon reaching a certain age, typically 21, sometimes 25 or 30. Often the beneficiary is given a degree of control over the funds and can disperse them to maintain a lifestyle. While this is enough to keep the funds protected until the child is old enough to handle them responsibly, it is not enough to keep them protected in the case of divorce. Place logo or logotype here, otherwise delete this. VIDEO LAW OFFICE OF DAVID PARKER BLOG PLLC www.parkertrustlaw.com
- 4. For that purpose, the funds should be kept secure for as long as possible, and protected from the beneficiary’s own discretionary control. Otherwise, they could be assessed for any number of purposes by a court: distribution as community property in a divorce, or child support, depending on the circumstances and the exact provisions in the trust itself. The original article should be consulted for details. Place logo or logotype here, otherwise delete this. VIDEO LAW OFFICE OF DAVID PARKER BLOG PLLC www.parkertrustlaw.com
- 5. It’s always a trade-off, of course. The less control the beneficiary has over the trust funds, the less enjoyment and responsibility and, in general, ownership he or she will have. At the same time, a more restricted trust (particularly one that does not have discretionary provisions for income maintenance) will be better protected from legal claims. For those whose main concern is New York asset protection, that is the stronger and more important consideration. Place logo or logotype here, otherwise delete this. VIDEO LAW OFFICE OF DAVID PARKER BLOG PLLC www.parkertrustlaw.com
- 6. Law Office of David Parker Estate Planning and Elder Law www.parkertrustlaw.com