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Protecting heirs from financial responsibility

On Behalf of | Jun 21, 2019 | Estate Planning

Many parents expect to give their children or other heirs an inheritance but may be concerned that all the wealth they earned will be squandered by an irresponsible heir. There are several reasons this could happen, including bad financial habits, unhealthy relationships, and addiction issues. For parents in Pennsylvania, there are ways to control the distribution of inheritance so the heirs can get the money they need without the ability to spend it all at once.

A spendthrift trust protects heirs from their own financial mistakes by assigning a trustee who can decide how the heir spends their money. This trust is also protected from creditors because it is not directly in the beneficiary’s name, so even past debts, settlements, and lawsuits can’t be collected on while in the trust. The trustee in this situation plays a very critical role.

The grantor of the trust is the person who decides how much power to give to the trustee. The trustee may be directed to simply make regular payments to the beneficiary regardless of circumstances or events, or they can be given more discretion on when and how much money to give out for what purposes. They can also make access to money contingent on certain factors like getting good grades or passing drug tests.

Families who want to create a trust that protects money from abuse should work with Pittsburg, Pennsylvania, estate planning attorneys. They will work closely with their client to establish objectives, draft necessary legal documents, and make amendments when needed. Tax laws and other regulations that affect estates can change often, so it’s the responsibility of attorneys to help their clients make decisions based on the most current state and federal laws.