Protecting Your Children and What You Leave Them from Divorce or Lawsuit Using a Heritage Trust
Why do most people prepare an estate plan? Most people do so to take care of their family or loved ones. But the shocking reality is that most of the estate plans we review fail to do this. While there are many reasons for that, we will focus on one of the most important reasons – people pass on their assets to their children the wrong way, apparently not realizing that they are risking the possibility of a total loss of the assets. The good news is that we will show you how to solve that problem and truly protect what you have preserved for your family and loved ones.
Many people say they just want what they have to go to their children, and then the children can do what they want with it. Many parents don’t want to “control from the grave.” That sounds reasonable and it feels as though you are treating your children as mature adults, but such an attitude can cost your family everything you might leave them.
There is a huge difference between controlling from the grave and handcuffing from the grave. What people usually mean is that they do not want to “handcuff” their children. The wrong control can leave them feeling handcuffed and frustrated, and it can be very expensive.
Often people do not consider the benefits of some measure of control because to them it means controlling from the grave by handcuffing the children. They don’t want unreasonable restrictions put on children whom they trust. That appears to make sense. But how can someone really make an intelligent decision about something without first exploring what type of control might be good? Some level of controlling from the grave can offer huge benefits to your children and grandchildren.
There is a powerful tool available that provides a level of control good for everyone except predators who want to take assets from your family. That one tool, with the right controls, can provide seven benefits to your children they cannot get through their own efforts. In addition, the tool can be flexible. The “controls” we build into this tool are similar to the steering wheel on a car. This tool puts your children in control; however, if there are no special controls (i.e., protections), then your children can lose their inheritance to divorce or lawsuit predators.
How would you feel, if in a divorce, your child’s spouse got some – or even all – of what you wanted your child to have? What if your assets went to your child’s replacement instead of to your child or to your grandchildren? Paradoxically, to give your children complete control over the assets is quite possibly to deprive them of the very control you are trying to give them.
What is this tool? We call it a Heritage Trust. Unfortunately, many estate planning and tax attorneys don’t know about it or understand it. Even fewer know how to properly draft a Heritage Trust!
The technique we will share with you can apply to others besides your future generations; in fact, it can apply to anyone you care about. In most cases, you will see the terms “child” or “children” used in this report. We use this narrower-scope term, but you may want to benefit charities or other people besides your children and grandchildren. So, when you see “children,” remember it doesn’t have to be children – it could be others you love!
When you pass assets to children, there are four basic ways to do it. The four options are that you could give it to them 1) outright, 2) in a payout trust, 3) in a convenience trust, or 4) in a Heritage Trust.
The main advantages of a Heritage Trust, are that it will…
- protect and preserve the assets you leave your children in ways they cannot do for themselves.
- protect your children from their own poor money management.
- protect your children from their existing creditors and future lawsuit predators.
- protect your children from bad marriages.
- provide bloodline protection so that if your child dies first in marriage, your assets go to your grandchildren instead of your child’s replacement if the surviving spouse remarries.
- protect your children from losing government benefits with any Government Assistance Program.
- remove assets from your children’s taxable estate so what they inherit from you will not be subject to estate tax upon their deaths. That could make their estate planning far less expensive.
With a Heritage Trust, parents can do for their children what their children cannot do for themselves. Aren’t your children worth at least considering a Heritage Trust?
In future blogs, I will go into each benefit individually and in detail.
If you would like to learn more and have the opportunity to discuss how this would apply to your family, all you need to do is call HAIMAN HOGUE today: (469) 893-5337 or email us at info@HaimanHogue.com and schedule your FREE consultation with one of our caring and professional attorneys.
By Rex L. Hogue