You've invested, built your fortune, and now you want to pass some of it on to your heirs. If you have been extraordinarily lucky, your children and grandchildren are well-grounded, established, successful people who are responsible in every way. If you are living in the real world, however, this may not always be the case. How do you Save your Heirs from themselves?
Create what is known as a spendthrift trust. In short, a spendthrift trust is a trust account overseen by a trustee, that controls the assets you leave after you've died. The beneficiary is forbidden from spending the money before he or she actually receives distributions and the trustee has the authority to determine what payments are necessary according to the trust agreement. For example, if you left $5 million to your favorite nephew, and the trust account generated $250K per year in income that was paid out to him, he couldn't pledge the trust assets as collateral. If he did spend more than he was able to support - say, for example, he bought a $3 million house - the credits would simply be out of luck. The only cash they can collect from your nephew would be his $250K distribution, keeping the assets in place, generating dividends, interest, and other income safely and securely for decades to come.
Limitations on Self-Designated Spendthrift Trusts
If this great protection from creditors exist, why not simply create a spendthrift trust and name yourself beneficiary? Most states won't allow this. There are some exceptions, specifically the Nevada Spendthrift Trust, but you need to contact Legal Management Spendthrift Trusts for more information.
A Spendthrift Trusts is a relationship created by a "settler" whereby during his lifetime he transfers assets to a "trustee" for the benefit of another person or class of persons called "beneficiaries".
The Trust Deed is a written instrument or contractual agreement which sets out in detail the duties of the trustee, the names of the beneficiaries and the assets which are the subject of the trust. It enables the settler to make confidential provisions for himself or his family in a tax efficient manner during his lifetime or upon death, by divesting himself of income and assets to a trustee who will hold and administer them in a tax free jurisdiction such as Switzerland, Liechtenstein, Cayman Islands, British Virgin Island, Antigua and Barbuda.
With the ever growing threat of predatory lawsuits, punitive and retroactive government regulation, and the generally uncertain climate, asset protection trusts have become an important financial planning tool for doctors, entrepreneurs, developers, professionals, businessmen and anyone who has assets they do not want to lose.
The main purpose of an offshore trust is to protect the assets of the settler against financial disaster which may be caused by excessive death duties, a spendthrift family member, marital or family breakdown, mismanagement of business ventures, contingent creditors and political risk.
Saving Your Heirs from Themselves.
Saving Your Heirs from Themselves.
