• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Our Firm
    • Communities We Serve
      • Elizabethtown
      • Frankfort
      • Jeffersontown
      • Matthews
      • Middletown
      • Prospect
    • Meet Our Team
  • Services
    • Asset & Business Planning
    • Elder Law & Medicaid Planning
    • Estate and Gift Tax Figures
    • Family-Owned Businesses & Farms
    • Financial Planning Assistance
    • IRA & Retirement Planning
    • Legacy Planning Services
    • LGBTQ Estate Planning
    • Loss of a Loved One
    • Power of Attorney
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
    • Young Families
  • Resources
    • Client Resources
      • Business Succession Planning Checklist
      • Estate Planning Seminars
      • Estate Planning Worksheet
      • Is Your Estate Plan Outdated?
      • Kentucky Retirement Resources
      • Louisville Elder Law Resources
      • Louisville Probate Resources
      • Presentations
    • Elder Law Reports
    • Finding the Right Estate Planning Firm
    • Frequently Asked Questions
      • Estate Planning Frequently Asked Questions
      • LGBTQ Frequently Asked Questions
    • Newsletters
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning For Niches
      • Trust Administration
  • Blog
  • Contact Us

Gersh Law Offices, P.S.C. | Louisville, KY

Estate Planning | Medicaid | VA

Connect with us today(502) 423-7023

Attend a Free Seminar
Home / Estate Planning Articles / Why a Trust Makes Sense – Even If Your Child Is Not a Child

Why a Trust Makes Sense – Even If Your Child Is Not a Child

January 31, 2012

Compliments of Our Law Firm,
By: The American Academy of Estate Planning Attorneys

Parents of adult children often don’t give much thought to the manner in which their children receive their inheritances. They decide how to divide their assets and then distribute their estates directly to their children – end of story.

If you want to make sure your children enjoy flexibility in accessing and using their inheritances while minimizing the impact of taxes, divorce, lawsuits, and other threats, it might be better to leave their inheritances in a Trust.

Flexibility and Control

For an adult child who is financially savvy and responsible, a Trust can be drafted to provide a great deal of flexibility. Your child can serve as his own Trustee, and he can have the power to access the Trust property, invest and re-invest it, and distribute it to himself for purposes of health, education, maintenance, and support. He would also have the option to retain property in the Trust and do things with it, like buy a home to live in or start and operate a business.

Divorce and Child Support

Your child’s ability to retain property in the Trust is important, because as long as assets are owned by a properly-structured Trust, they are protected. For instance, in most states, assets in such a Trust would not be considered marital property and would not be subject to division if your child got divorced. This would mean your child could keep his inheritance, rather than his ex-spouse walking away with a portion – or even all – of it. Similarly, in some states, inherited Trust assets can be protected from claims for alimony or child support.

Creditors and Lawsuits

Another advantage of leaving your child’s inheritance in a Trust is that the provisions can be drafted in such a manner that the Trust will shield the property from creditors. Obviously, this would be an effective strategy if your child has trouble managing his money. However, it might be wise even if your child is financially responsible. For example, if he’s involved in a car accident and the other driver files a lawsuit against him, the assets in his Trust could be protected from any judgment awarded in the case.

It’s important to remember that state laws vary, and the degree of creditor protection might depend on the precise way in which the Trust is set up.

Taxes

A Trust also can keep assets out of your child’s own taxable estate for estate tax purposes, and it can offer him a great deal of flexibility when it comes to income tax planning. This way, the inheritance you leave your child will not compound his own estate tax concerns.

Extra Protection

If your child does not have much financial experience, has not yet reached adulthood, or otherwise needs additional oversight, a Trust can be structured to give him extra protection and guidance. You can name a third-party Trustee and place additional restrictions on your child’s access to his inheritance.

An experienced estate planning attorney can help you evaluate your family’s needs and create a Trust which strikes the perfect balance between flexibility and security.

Other Articles You May Find Useful

Leaving assets to a Beneficiary
Leaving Assets Can Be Tricky – Part 3
Leaving assets to a Beneficiary
Leaving Assets Can Be Tricky – Part 2
Leaving assets to a Beneficiary
Leaving Assets Can Be Tricky
Sign your Financial Power of Attorney and Healthcare Power of Attorney
The Basics: “HIPAA” Powers
Sign your Financial Power of Attorney and Healthcare Power of Attorney
The Basics: Power of Attorney for Healthcare
Sign your Financial Power of Attorney and Healthcare Power of Attorney
The Basics: Financial Power of Attorney

Primary Sidebar

FREE ESTATE PLANNING WORKSHEET

Download our free "Protecting the Future" worksheet to get started!

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • Twitter
  • Linkedin

Testimonials

5 star
Client Review
September 18, 2020
    

I have been a client of Cochran Gersh Law Offices since 2005. I can’t say enough good things about them. Absolutely first rate! Thanks to the team, my estate and trusts are set up and my family won’t have to deal with an unorganized mess when I am gone.

default image
– JIM

Where We Are

Cochran Gersh Law Office
916 Lilly Creek Road, Suite 102
Louisville, KY 40243
Phone: (502) 423-7023
Fax: (502) 423-1108

See Larger Map Get Directions

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 12:00 PM

Map

map for Cochrangersh Law Offices, P.S.C. office

Footer

  • Privacy Policy
  • Sitemap
  • Contact Us

Connect with Us

  • Facebook
  • Twitter
  • Linkedin
footer-logo

Cochran Gersh Law Office
All Right Reseved.

Attorney Advertisement

© 2023 American Academy of Estate Planning Attorneys, Inc.