Golden Opportunities

You’ve got it all worked out, to leave your assets to your children. At your death, your money and property will become theirs. It seems so simple. Or is it?
What if your child gets a divorce five or ten years later? Have you thought about this? Your child’s spouse is likely to go after half of your child’s assets-- including your money that you left as an inheritance. Or perhaps your child dies ten years after you, leaving everything to the spouse. Whether due to death or divorce, part or all of your money will pass out of your “bloodline” family to your son-in-law or daughter-in-law. Sure hope you like them!
What if your child is sued after receiving your inheritance? Kiss it goodbye because the creditor can grab it.
Is there any way to protect your inheritance for your kids and grandkids, for the bloodline, keeping it away from in-laws and creditors? Many folks mistakenly think they’re already protected, because their will says “per stirpes.” Sorry, but per stirpes only means that if your child predeceases you, dies before you, then the inheritance goes to your child’s offspring rather than to the spouse.
A per stirpes clause only helps if your child dies before you. And, thankfully, this doesn’t happen too often. In fact, there’s no way to keep your estate for your bloodline family with a will, or joint ownership, or beneficiary designations, or even a standard trust. So what’s a parent to do?
There’s only one way to protect your estate for your children and grandchildren after you’re gone. It’s called a “Bloodline Trust.”
Here’s how it works. While you’re alive, all of the assets remain yours. When you die, your assets will pass into the bloodline trust, one for each of your children. There’s’s no probate.
Let’s say you have two children, Bob and Mary. Instead of Bob and Mary inheriting outright, half the inheritance goes into a Bob trust and half into a Mary trust.
If Bob or Mary is irresponsible, or if they can’t handle money, you can name a third party as trustee to manage the inheritance for Bob or Mary. But if they are responsible, you can name Bob as his own trustee and Mary as her own trustee. That’s the way most folks do it. Bob will be in charge of his trust, Mary can be in charge of her trust.
After you’re gone, your children can decide on how they invest the funds in their bloodline trusts. Stocks, bonds, CDs, they can invest how they wish.
And your children, not their spouses or creditors, can take money out of the trust whenever they want, for anything they or their kids need.
For example, they can take money for food, clothing, rent or mortgage payments, or health care needs. They can use their trust funds to pay for their kids’ education. There’s lots of flexibility.
But here’s the benefit. If your child later gets a divorce, the bloodline trust maintains the inheritance as separate assets. Only marital assets are to be split in a divorce.
At death, the remaining trust funds can be directed to your child’s children, your grandchildren, not the in-laws. And the trust funds can be protected if your child is sued.
Bloodline trusts offer some very useful protections. Protections for your kids in case of divorce or a lawsuit. Protections for your grandchildren when your children die.
Please understand, trusts in general, and bloodline trusts in particular, are complicated, and this is just an overview. If you’d like to learn more, please be our guest at a Budish and Solomon seminar this coming week. For dates, times and locations, call the number that’s up next.