Do you wish to protect assets from creditors, a divorced spouse, or other types of legal claims? You may be able to do so by creating a separate Lifetime Trust for each beneficiary. Lifetime Trusts allow you to create a legal barrier between the properties held and the claims against a beneficiary.
All assets owned by a Trust are the property of the Trust for as long as the Trust is in effect. In the case of a minor beneficiary, the creation of a Trust allows you to keep the beneficiary’s inheritance away from a court-supervised guardianship or conservatorship. However, the normal practice is to create a Trust for a minor and include a provision for its termination when the minor reaches a specific age or is considered mature enough to make his or her own investment decisions. Once the Trust is terminated, the assets held under trust are transferred to the minor beneficiary and become vulnerable to claims. To prevent that possibility, you may decide to create a Lifetime Trust that will continue for the lifetime of the beneficiary.
A Lifetime Trust can also be drafted to protect a beneficiary’s inheritance from his or her own poor decisions or spending habits. The creation of such a Trust will restrict the way the beneficiary can spend and utilize assets while helping to maintain a steady stream of income.
Lifetime Trusts can also be continued for future generations and be established as a Generation Skipping Trust. A Generation Skipping Trust lasts the lifetime of a beneficiary and is then passed on to the next generation of beneficiaries, bypassing estate taxes after the death of the initial beneficiary.