If you’re thinking about passing on parts of your estate to your beneficiaries, this is certainly a worthwhile goal but it’s one that should be considered carefully. Leaving gifts outright can lead to problems. For example, some of the most common issues associated with leaving assets to your beneficiaries directly include:
- The trustee of any trust does not have an opportunity to build relationships well with the beneficiaries.
- Bankruptcy courts can seize a bankruptcy beneficiary’s inheritance to pay creditors and associated costs
- A divorce court could ultimately ward some of the inheritance to creditors, limiting your beneficiary’s inheritance to satisfy the creditor’s claim
Using trusts to plan ahead can allow you to have some control over how these assets are distributed to your beneficiaries while also giving you peace of mind that some or all of these issues can be addressed. Depending on your overall goals, a trust can help fit into your general estate planning and allow you to accomplish multiple goals at once. A trust, among other asset protection planning tools, is strongly recommended.
Consulting with a New Jersey estate planning attorney is strongly recommended if you intend to go through this process. Speaking with an attorney sooner rather than later can help to accomplish your goals now and take these worries off your plate.