Leaving a legacy for your children is likely a top priority. You’ve worked hard to accumulate wealth, and you want to ensure it benefits your family for generations. However, without proper planning, your children’s inheritance could be at risk.
Lawsuits, divorce, taxes, and more can drain away what you intend to pass down. Fortunately, you can take proactive steps to shield your children’s inheritance and set them up for lifelong financial security.
Why your children’s inheritance needs protection
Your assets may be vulnerable without strategic planning. Consider these risks:
- Lawsuits: Should your child ever face litigation, their inheritance could be seized to pay legal judgments. Creditors could also pursue inherited assets.
- Divorce: In the event of a divorce, up to half of your child’s inheritance could go to the ex-spouse. This may not align with your wishes.
- Taxes: Estate taxes at the federal and state levels could claim up to 40% of inheritances. This significantly reduces wealth transfers.
- Poor money management: If heirs are unprepared or lack discipline, inheritances can be squandered quickly.
Safeguard your legacy with a lifetime asset protection trust.
A powerful solution to shield your children’s inheritance is establishing a lifetime asset protection trust (LAPT). This strategically structured trust offers unmatched safeguards.
How an LAPT works
- Assets are transferred into an irrevocable trust, with your child named as the beneficiary.
- Your child becomes the trustee at a specified age, giving them control over management and investments.
- Assets are protected from lawsuits, divorce, and more that your child may face. Creditors cannot seize trust funds.
- Estate taxes are minimized, allowing more wealth to transfer to heirs. State protections further reduce tax burdens.
- Funds can grow tax-deferred and then be distributed to heirs under optimal conditions. This supports lifelong security.
Unparalleled Benefits of an LAPT
- Avoid probate: assets transferred to the trust avoid the court process after one’s death.
- Prevents court control of assets: Trust terms prevent court interference and overseer assignments.
- Offers creditor protection: creditors cannot access funds assigned to the trust.
- Reduces tax burden: estate taxes are lowered compared to non-trust inheritance.
- Provides divorce protection: Trust assets are shielded from divorce proceedings.
- Lifelong control by your heirs: Beneficiaries can serve as trustees.
- Allows for flexibility: trust terms can be drafted to meet specific goals.
- Promotes responsible management: Trustees must act in the beneficiaries’ interests.
For these reasons, an LAPT offers the best protection and control for inherited wealth.
Leave even small inheritances protected.
You may think it’s not worthwhile to protect smaller inheritances. The truth is that even modest savings can become substantial legacies when properly preserved.
For example, an inheritance of $50,000 could provide:
- A head start on retirement savings for young adults
- College funding for grandchildren
- Down payment funds for a first home
When protected in an LAPT, that $50,000 could grow substantially over decades:
- Invested conservatively and averaging 6% returns, it would grow to over $500,000 in 30 years.
- At 8% average returns, it would reach nearly $1 million in 30 years.
While the initial inheritance seems small, the potential long-term value is tremendous. An LAPT helps maximize the impact.
Take action now to protect generations.
Hopefully, you now understand the risks to your children’s inheritance and how an LAPT offers ironclad protection.
You have the opportunity to leave a lasting legacy and provide security for multiple generations.
Here are the steps to get started:
- Consult an estate planning attorney. Get professional advice on establishing an LAPT.
- Develop trust terms: define parameters like trustee assignments, payout schedules, etc.
- Title assets correctly: Work with your lawyer to correctly title assets being placed in the trust.
- Name beneficiaries: Specify family members who will benefit from the trust.
- Designate trustees: Choose dependable individuals to manage the trust after you’re gone.
- Draft other documents. Create any needed ancillary documents to align with the trust.
With sound estate planning, you can preserve and grow your wealth for your children, grandchildren, and beyond. An LAPT provides ironclad asset protection they can rely on.
Don’t leave this important preparation until it’s too late. Contact an estate planning lawyer and set up an LAPT today.
