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May 16, 2022

Your trust can create what is called discretionary lifetime trusts for your beneficiaries.  This is a type of irrevocable trust that can provide your beneficiary with some amazing protection. Let’s take a closer look.

Creating a revocable trust is a great way to protect young, troubled, or financially inexperienced beneficiaries but what if you’re concerned about more?  Perhaps protecting your beneficiary’s inheritance from frivolous lawsuits or potential divorce – this is when a discretionary lifetime trust should be considered for all of your beneficiaries, minors and adults alike.

What Is a Discretionary Lifetime Trust?

It is a type of irrevocable trust that you can transfer assets into while you are alive for the benefit of your beneficiaries – or the assets you leave after you die may then be transferred into the discretionary lifetime trust for benefit of your beneficiaries.

The trust is considered discretionary because you create the the limited circumstances when the trustee can distribute assets for the use and benefit of the beneficiaries. For example, you can authorize the trustee to use trust assets to pay for education expenses, health related costs, purchasing real estate, starting a business or even for a wedding. If the trust is funded with assets that are invested properly, and you choose the right trustee to carry out your wishes, the trust funds may last for the beneficiary’s entire lifetime.

How Does a Discretionary Lifetime Trust Protect a Beneficiary’s Inheritance?

With a discretionary lifetime trust, each beneficiary will have a fighting chance against a divorcing spouse or lawsuit because their inheritance will be segregated inside of their trust, away from their own personal assets, and out of their control. Creating this type of protective “barrier” around the inherited property shows the world that the inheritance is not the legally the beneficiary’s property to do with as they please. Instead, only the designated trustee can reach inside the trust and, according to your specific instructions, pull funds out for the benefit of the beneficiary. Creditors, divorcing spouses and predators are generally blocked from reaching inside the trust and taking property out.

After the beneficiary’s death, what is left inside their trust will pass to the heirs you choose. For example, you may choose to have the assets pass to your grandchildren to be held inside of their own separate trusts and continue to pass on down the line, thereby creating a cascading series of discretionary lifetime trusts that will protect the inherited property and keep it in your family for decades to come.

What Should You Do?

This is not all too good to be true. Instead, it’s something that can be easily accomplished with the help of an experienced attorney.  Our firm is available to discuss how you can incorporate discretionary lifetime trusts into your estate plan. Give us a call today to schedule your strategy session. (954) 999-9683