A spendthrift trust is a trust that you can create if you want to leave money to someone but you are concerned that the person who you are leaving money to is irresponsible with managing money. The trust allows you to make a financial gift without worrying that the money will just be lost right away to creditors or will be spent quickly with nothing to show for it.
You need to make an informed choice about whether a spendthrift trust is the right choice to protect an inheritance you want to leave to a loved one. You also need to make certain that you have taken the proper steps to create a legally valid trust under New York law.
Mark S. Eghrari & Associates PLLC can help. Call us today to talk with a Long Island trust lawyer to find out more about how a spendthrift trust works and about how you can create one.
How Does a Spendthrift Trust Work?
A spendthrift trust is a trust that you create in accordance with New York laws. You must follow the required process for preparing your trust document, which an experienced attorney can assist you with.
When you create your trust, you will name a beneficiary. The beneficiary is the person who you want to provide a financial gift to but who you are worried is not going to be able to manage the money or use the gift wisely
You also name a trustee. The trustee is the person who is vested with responsibility for managing the funds and property held within the trust and for doling out funds to the beneficiary according to your instructions in the trust document. The trustee has a fiduciary duty to act in the best interests of the beneficiary and to manage the money in an appropriate manner. You can select someone who you are confident has the ability to be responsible with protecting the wealth you are leaving behind for your beneficiary.
You will also need to fund the trust, which means transferring the ownership of some of your assets to the trust. One major purpose of creating a trust is so that the trust is the owner of the assets, not your beneficiary who is irresponsible with money. Since the beneficiary does not actually own anything, creditors cannot try to take the property you have left to him. The trust will own whatever property you transfer into it, and the trustee will manage the funds and use the property according to your instructions to provide financial aid to the beneficiary. An experienced attorney can help you with the process of funding the trust.
Do You Need a Spendthrift Trust?
You should strongly think about creating a spendthrift trust if you have any concerns that a person who you will be giving money to is not going to be able to effectively manage the funds. You work hard for the money you have made and the wealth that you have created. You want to use that money to take care of the people you love, and you want an inheritance to be a blessing.
If money is given to someone who cannot be responsible with it, or who loses it quickly, then your hard work won’t be able to provide the type of financial stability and security you wanted to offer your loved one. Your wealth should not just be lost to creditors or bad spending decisions but should instead be used wisely to truly enhance the quality of life of your loved ones. A spendthrift trust can help to make that happen by ensuring that money is managed appropriately and provided to your beneficiary according to your instructions.
There are also other types of trusts you can consider using to protect heirs and to provide appropriate control over your assets. Mark S. Eghrari & Associates PLLC can help you to make a decision on what type of trust can best accomplish your estate planning goals.
Getting Help from A Long Island Trusts Lawyer
Mark S. Eghrari & Associates PLLC can offer you advice on all of the different kinds of trusts available under New York law and can assist you in selecting the right kind of trust to meet your family’s needs. Give us a call at (631) 265-0599 or contact us online to find out more about how spendthrift trusts work. You can also join us for a free seminar to discover more about trust creation as part of a comprehensive estate plan.