How to Protect a Loved One by Using a Trust

The overall concept of an estate plan is to provide for the distribution and transfer of all your estate assets upon your death. Often, an estate plan calls for you to begin transferring assets while still alive through gifts as well. Although there are numerous tools that will effectuate the transfer of assets, when you wish to protect a beneficiary from his or herself, you may wish to consider using a trust.
Whether your intended beneficiary is young, notoriously bad with money, or simply lacking in the experience necessary to handle a large financial gift, it is not uncommon for a benefactor to be concerned about handing over a large sum of money or a valuable asset. Trusts are the perfect tool for this situation.
By placing assets or funds into a trust, you have the ability to appoint a neutral party as the trustee to oversee the administration of the trust. Your trust terms can be as specific or as flexible as you wish; however, the bottom line is that the trustee will decide when and how assets are distributed to the beneficiary. By using a trust, you effectively protect the beneficiary from being frivolous or foolhardy with the assets left to him or her by placing control of those assets in the hands of someone more experienced with financial affairs.
Along with preventing your beneficiary from spending the money foolishly, you may also be able to protect the assets from creditors of the beneficiary in the event the beneficiary fails to handle his or her finances outside of the trust funds in a prudent manner.

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