When doing their estate planning, some people run into a conundrum. They have potential beneficiaries to whom they want to leave a portion of their estate Yet they are not sure that their loved ones will be able to manage a large sum of money.
What options do these people have?
Spendthrift trusts can protect your loved ones
The name can be somewhat of a misnomer, as spendthrift trusts are not solely used for heirs who have proven unable to manage their money (although they are effective for those kin, too).
Perhaps you have a child or grandchild who struggles with addiction to alcohol, drugs or gambling. As their parent, you don’t want to contribute to their self-destruction. Neither do you want them to be disinherited. Hence, funding a spendthrift trust for them can both curb their spending and provide them with funds to live comfortably.
Who else may benefit from a spendthrift trust?
Do you have an heir with an overbearing spouse who may bully them into accessing funds to give to them? Spendthrift trusts prevent that, as they will not be able to manipulate the trustee you appoint or change the terms you dictate.
Similarly, any heirs engaged in a business where malpractice suits are common, e.g., medicine and law, would have their funds protected by a spendthrift trust.
Not everyone will need this kind of trust
Everyone faces different estate-planning challenges. If you are at a crossroads and are struggling to fairly divide your estate among your heirs, learning more about Georgia’s laws on the matter may add clarity to your situation.