Estate planning in New York is recommended for every adult. Planning now is worth it because you’ll protect your health, grow your wealth and preserve your money for heirs. What makes planning a challenge for some, however, are the vast options that exist. With trusts alone, you have over 10 different types that specialize in different things. If you’re thinking of leaving assets to an heir who has bad spending habits, then a spendthrift trust is an option.
Your beneficiaries may have debts, and someone’s debt could be overbearing. When you transfer assets to someone, the debt they owe can haunt them. Trusts can protect your future beneficiaries from their own creditors. With spendthrift trusts, you can write clauses to disable a beneficiary from direct liability over their possessions.
During estate planning, ask about any moments when your heirs have wasted money. Everyone makes mistakes, but some of the faults found with their money may show up as habitual. A spendthrift trust is designed for heirs you don’t fully trust with lumps of cash. The core clauses you need for this trust cover limitations on spending via a trustee.
Little to no financial literacy
Whether due to age or education, you need to anticipate how much someone will know about money. Like with children, you may want to hold the trust for a while before transferring it.
Estate planning in New York using a spendthrift trust
A spendthrift trust has clauses that keep it active after you die. In a sense, it goes into effect upon your death. This is only possible when you assign a trustee over the trust. This person grants or denies the money that beneficiaries ask for from their funds, so you can help secure their financial future.