When an individual inherits substantial assets from a trust, working closely with a trust attorney is a good idea, particularly if the beneficiary is unable to manage those assets safely themselves. These legal professionals possess the expertise to help beneficiaries navigate the complexities of trust administration and ensure the distribution of assets is executed properly.
One of the primary reasons a trust beneficiary should engage a trust attorney is to avoid potential missteps that could have significant financial and legal ramifications. Without the guidance of an experienced attorney, beneficiaries may inadvertently make decisions that trigger unexpected tax liabilities, jeopardize the integrity of the trust, or even lead to disputes with other beneficiaries.
Carlsbad Trust attorney Andrew Fesler dives deeper into this situation and provides some solutions for assisting beneficiaries who cannot manage their distributions.
Transcript:
Trusts give us some pretty powerful tools to either give beneficiaries the ability to protect themselves from bad actors: people who might sue them, divorcing spouses, bankruptcy, etc., but it also gives us the ability to designate third-party trustees to manage the assets on behalf of a beneficiary who may not be able to manage those assets for themselves safely for a myriad of reasons, whether it’s because they’re incapacitated, they have spendthrift issues, they’re younger than 18, etc.
What we do for most clients these days is create what’s called a continuing trust. This trust establishes an irrevocable trust at the death of the parents in the case of a couple where the initial trust document creates an irrevocable trust that we call descendants trust for the benefit of the beneficiary.
Now, if that beneficiary is capable of managing their assets on their own, we can name them as the trustee, and they can be trustees of their own trust. As long as that trust has spendthrift provisions, it will be the assets inside that trust that have been inherited because they’ve been inherited from somebody else, and can be protected from lawsuits, creditors, divorcing spouses, etc.
If we’re concerned that that beneficiary can’t manage those assets on their own, we can name a third-party trustee to manage those assets on behalf of that beneficiary, invest them wisely, and then distribute them to those beneficiaries for their benefit and for the purposes that the client would want them to be distributed for.
We don’t tend to get into listing the reasons that assets would be distributed so much as giving the trustee guidelines in the trust document for what we want those assets to be used for so that the beneficiary will use them for their benefit and not to harm themselves in the case of, say, somebody who has a drug problem or mental health issues, etc.
Work with the Law Office of Andrew Fesler Today
If you need help managing your distributions, contact the Law Office of Andrew Fesler today by calling (760) 444-0943 to learn more. Our team can help you navigate complicated trust implications and ensure all parties have the support they require.
