The Power of A Well-Planned Trust
You may feel hesitant to leave your wealth to heirs who have not learned the value of hard work yet. After all, too much privilege can be detrimental to a person’s development.
Trusts are tools that can allow you to guide your children and grandchildren after you are gone. At the same time, trusts can protect their inheritance.
Guidance Through Trusts
Although Washington has specific rules regulating trusts, within those, you have a lot of leeway to determine how you want your heirs to receive their inheritance. For example, the assets may provide interest that the trustee can divide among the beneficiaries, but the beneficiaries may not have access to the assets themselves. This provides them with income, but not wealth.
You could leave instructions for the trustee to distribute assets to beneficiaries after they reach a certain milestone, such as reaching a certain age or obtaining an education. You could also instruct the trustee to use the trust to pay certain expenses, such as housing, transportation, medical bills or educational costs. The beneficiaries may never even receive control over the funds or the assets but may still benefit from them considerably.
Protection Through Trusts
Creditors, lawsuits and messy divorces can wipe out inheritances. However, assets in a trust do not belong to the beneficiary, so others cannot seize them to pay a debt or satisfy a judgment. The trust can also protect the assets from the beneficiaries themselves. By designating that control of the assets remains with the trustee, you may prevent a beneficiary from spending the inheritance unwisely. A trust can also prevent inheritance and estate taxes from depleting the assets.