As an Elder Law attorney, many clients consult with me with regard to trust planning to protect assets from the cost of long term care. However, many clients do not realize trusts can also be used to protect assets for your children. These types of trusts are known as Descendants’ Trusts and can be incorporated into a Will, Irrevocable Trust or Revocable Trust.
A Descendants’ Trust is very versatile and can be drafted various ways depending on your objectives. The trust can allow the beneficiary to be their own trustee or you can choose a trustee to manage the assets on behalf of the beneficiary. To the extent that assets remain in the trust, they are protected from the beneficiary’s creditors, divorcing spouses and even the IRS. If drafted properly, the assets left in the trust at the child’s death will also pass tax free to their own children.
Whether your estate plan includes a trust or a traditional last will and testament, it is important to consider leaving your assets to your beneficiaries in a creditor and divorce protected Descendants Trust.