may seem tempting because it could be a true surprise to give to one of your loved ones if you plan to pass these assets along. However, you might want to think about planning ahead to pass on these distributions instead. While it might remove some of the elements of surprise, a comprehensive estate plan can help to protect the beneficiary and you.
An inheritance that is given outright to a child, grandchild or a spouse could be exposed to risks. If the inheritance is instead left inside a trust, the asset has a better chance of surviving over the long run because this allows the appointed trustee to build relationships with the beneficiaries while you are still alive.
In addition, if the assets by you have been left outright as opposed to be placed into a trust, these assets could easily be transferred away after you pass away. Outright distributions and gifts have five primary risks associated with them. These include:
* A divorce court could award some or all of a beneficiary’s inheritance to a person who is soon to be an ex-spouse of the gift-giver.
* Conservatorship or guardianship courts can impose what’s known as living probate, if a beneficiary later becomes incapacitated.
* If the beneficiary hasn’t effectively planned for the management of these assets, then the family may be forced to probate the entire estate.
* Bankruptcy courts could gain access to a bankrupt beneficiary’s inheritance in order to pay off creditors.
* Judgement creditors can also gain access to an inheritance to satisfy a claim even if this might otherwise be deemed a frivolous lawsuit.
As you can see, there are numerous benefits to passing on a gift in the form of a trust rather than giving it outright to a beneficiary. Talk to a New Jersey estate planning attorney to learn more about the benefits of trusts.