Understanding a Discretionary Trust
Trust Lawyer
It is likely never easy to talk about death and dying, and that goes for talking about the planning of your estate as well. Not only is it uncomfortable to think about the inevitable end, but it can also be frightening to believe that your assets will be out of your control. While you might think that a simple will naming your beneficiaries is enough to protect and transfer your assets as you’d like, that is not always the case. Therefore, if you want to protect your assets and make sure that they are distributed as you want them to be, then you should consider a discretionary trust.
Defining the Trust
Discretionary trusts are considered irrevocable trusts, which means that they cannot be changed once they are established. These funds are typically used to protect the funded assets for the beneficiary. Protection covers a lot of bases, from poor money-management, or creditors to divorcing spouses. Therefore, discretionary trusts shield assets from outside sources.
Customizing the Terms and Limits
A discretionary trust fund allows you to customize how and when assets are distributed. While your beneficiary is the designated heir, it is the duty of the trustee to manage the assets as you so ordered. Therefore, you can ensure that your beneficiary is taken care of per the terms of the trust.
Minimizing Tax Risks
Estate taxes are expensive and can often greatly diminish planned inheritances. Trust, however, protect assets against excessive estate taxes and even protect assets that are passed down from generation to generation.
Controlling Assets for the Long-Term
Beyond customizing the distribution of assets and avoiding higher taxes, discretionary trusts allow you to control assets over the long-term. While primary beneficiaries are listed in the trust, you will also be able to designate secondary beneficiaries or those who inherit the remainder of the trust if the original beneficiary passes away. Therefore, you can rest assured that your estate remains in your family.
It is uncomfortable to think about the end of one’s life, but to ensure that your family is protected and cared for, it is often necessary. While there are many forms of trusts, the discretionary trust is likely the best tool to ensure that your beneficiaries receive their inheritance. This irrevocable trust protects your estate against creditors, divorcing spouses and other financial predators, ensuring that your heirs receive the inheritance you planned for them. Therefore, if you are ready to create a discretionary trust, or if you are considering all of your options, then contact an experienced estate planning lawyer in Palatine, IL to answer any of your questions.
Thanks to Bott & Associates, Ltd. for their insight into estate planning and understanding discretionary trusts.