Support Trust to Manage Inheritance
April 3rd, 2017
This edition of the Koldin Report E-Newsletter reviews the use of a “Support Trust” to hold and manage the inheritance of family members. All prior newsletters are saved on our website. You can read them by clicking here.
When your child has problems in his/her life, such as a bad marriage, drug/alcohol abuse, or is a poor manager of money and will spend his/her inheritance too quickly, you may feel that your only option is to disinherit your child and leave his/her share to your grandchildren or to one of your other children.
When we tell our clients that they can leave a child’s share in a special trust, our clients are often relieved to hear that there is a way to provide for their child without needing to disinherit him/her.
This type of Trust is often called a “Support Trust” or a “Discretionary Trust.” You can designate a Trustee or Trustees to oversee the child’s inheritance. The Trustee is the caretaker of the funds and can be given discretion as to when and how the funds should be spent.
You can designate a certain age when the funds must be turned over outright to your child, or you can direct that the Trust continue for his/her lifetime. You can also designate who you want to inherit the remaining balance of the Trust after your child dies.
You can also designate whether all distributions to the child are at the sole discretion of the Trustee or you can require that certain distributions be made. One common mandatory distribution is to require the Trustee to distribute all Trust income to your child and then allow for additional distributions of principal at the discretion of the Trustee.
You can also require certain expenses to be paid for from the Trust such as having the Trust pay all taxes and insurance on your child’s home.
There is great flexibility on how these “Support Trusts” can be prepared. These “Support Trusts” can be part of the beneficiary provisions under your Last Will and Testament or under your Revocable or Irrevocable Trust.
The Koldin Law Center, P.C. is available to review your family situation and help you decide if a Support Trust as part of your beneficiary provisions would be advisable for you.
At the Koldin Law Center, P.C. with offices in Syracuse , New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. At the free initial consultation, we will review with you the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy.
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