Spendthrift Trusts
A spendthrift trust is a trust (often for the benefit of a person of doubtful financial judgment or capability) that is structured so that creditors of the beneficiary cannot go after the trust if they beneficiary owes them money. This way the trust can pay out living expenses monthly for as long as it has any money left and the beneficiary can't borrow against the future income stream and p*ss it away in advance. I am actually trustee for one of these trusts for the benefit of my sister. Smart move on my parents' part. These trusts are very common in estate planning for families with children with substance abuse issues.
Fluffer: How difficult is it to manage such an account? How, exactly do you manage it? I have read that leaving other relatives in charge of a Trust for someone with substance abuse issues can be taxing on the Trustee - and I want to avoid that. Thank you
Seek,
To set up such a trust, you should consult with an estate planning attorney who can draft the trust documents so that they function as you would like them to. You can name family members to act as trustee - basically manage the investment of the trust funds, dole out payments to the beneficiary, pay taxes and deal with legalities, but that can be an onerous responsibility on them and also strain the relationship with the beneficiary. You can also appoint professional trustees such as work for bank trust departments or independently, although they will charge fees that eat into the trust funds. This is more typically the choice with larger trusts. However, they don't have any family relationship that may be strained by acting as paymaster for your beneficiary who may not appreciate it when the trustee says no to their requests for more money now.
To set up such a trust, you should consult with an estate planning attorney who can draft the trust documents so that they function as you would like them to. You can name family members to act as trustee - basically manage the investment of the trust funds, dole out payments to the beneficiary, pay taxes and deal with legalities, but that can be an onerous responsibility on them and also strain the relationship with the beneficiary. You can also appoint professional trustees such as work for bank trust departments or independently, although they will charge fees that eat into the trust funds. This is more typically the choice with larger trusts. However, they don't have any family relationship that may be strained by acting as paymaster for your beneficiary who may not appreciate it when the trustee says no to their requests for more money now.
Yeah - Haven't found a good solution yet. Do not want to name a bank Trustee - have had bad family experiences with that, plus the Trust could last a long time and bank personnel change. They charge an enormous amount.
I am hoping to learn of some solution I have not heard of yet.
Thanks for your input.
I am hoping to learn of some solution I have not heard of yet.
Thanks for your input.
I was trustee for the insurance trust I mentioned, but that was dissolved prior to its actual need for a different arrangement. As Fluffer mentioned, an attorney was consulted to make all of these arrangements.
If you trust a particular individual who is younger than you, then that might be an option.
Banks often have Private Banking or Estate Banking departments, and you might interview with one with whom you feel comfortable dealing.
The attorney you consult might also have several ideas for trustee.
If you trust a particular individual who is younger than you, then that might be an option.
Banks often have Private Banking or Estate Banking departments, and you might interview with one with whom you feel comfortable dealing.
The attorney you consult might also have several ideas for trustee.
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