Protecting Assets Through A Testamentary Trust

In many circumstances, we recommend that our clients strongly consider placing their bequests into a testamentary trust, instead of an outright bequest. A testamentary trust is separate and distinct from the contingent Special Needs Trust. A testamentary trust, if properly managed, can protect a loved one‘s assets from creditors in the event the heir makes bad financial decisions, or has a money judgment entered against them individually. A testamentary trust can also provide an additional level of financial protection, in the event the heir becomes divorced. In many cases, the heir can serve as trustee of their own trust, and have full access to the money, while enjoying potential protection from creditors and/or divorcing spouses. 

In circumstances where a potential heir has shown financial irresponsibility, or has a history of alcohol and/or substance abuse, a testamentary trust can protect a loved one from their own self destructive tendencies. In those circumstances, the heir would not be selected as the trustee of their own trust, and their access to the inheritance would be limited by the terms of the last Will and Testament. 

Trust Planning
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