When planning an estate, people often want to know if they can give something away and still protect it. For example, can you give money to a child or grandchild and make sure they don't lose it in a divorce, car accident or some other traumatic event. There is a way to protect money but you can't give the money outright. There are many risks associated with giving someone money outright but many people do it because there is no cost associated with it. One of the alternatives to giving money outright is creating what is called a beneficiary controlled trust. The money is then moved into a trust rather than directly into the hands of the heir. You can make your child the trustee or appoint a trustee to control how much money they receive and when they will receive it. You can also build in flexibility that will allow them to use the money for investments. One downside to this method is that the trustee will need to keep trust accounting records and file a 1041 trust income tax return each year. Many times, the best option is to give some of the money outright and put the rest into a trust. These are the kinds of decisions that are involved in sophisticated estate planning and they are worth it if you want to protect your assets and your heirs. There is no one answer which is why we recommend that you call David M. Frees at 610-933-8069 or email him directly at [email protected] to learn more.
David M. Frees, III
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Attorney, Speaker and Author