Compliments of the McGee Law Firm, Attorney Brandon McGee
While individually we may be kind and caring, Americans as a group are a litigious bunch. While protecting yourself from lawsuits can be a difficult, complicated task, you can easily take steps to protect your children. You can protect your children from lawsuits, including divorce, by not leaving them anything. But, there is another way to keep the money from ending up in the hands of lawsuit plaintiffs and your children’s future ex-spouses. Let’s look at an example of three children: Johnny, Mary, and Betty.
- John is not good at managing money and is rather irresponsible in general
- Mary is a physician and a savvy investor
- Betty is a school teacher who sees the best in everyone
A Family Sentry Trust would be ideal for John. Such a trust would be set up for John’s lifetime and would have a third party as trustee. If John were to be sued, the discretionary standard of the trust would allow the trustee to refuse payment to John’s creditor. The trustee would invest the assets responsibly for John’s needs and his future.
A Family Sentry Trust also would be ideal for Mary. As a physician, Mary may have substantial risk of being sued. As in John’s situation, a third-party trustee with a discretionary standard for distributions would protect Mary from potential litigants. However, in Mary’s case, she could be named as Investment Trustee of her Sentry Trust, giving her control of how the trust assets are invested, but not control over distributions from her trust.
A Family Access Trust would be appropriate for Betty. Betty does not really have substantial risk of being sued. However, her trusting nature may allow her to be blind-sided by a divorce. A Family Access Trust would allow her to be the trustee of her own trust and make distributions as she sees fit. However, the assets would not get commingled with other marital property and would be protected from a divorce.
The Family Sentry Trust and the Family Access Trust are both part of an innovative, values-based approach to estate planning, “Legacy Wealth Planning.” Legacy Wealth Planning focuses not just on the transmission of assets, but of values and protections, as well. A qualified estate planning attorney who follows the Legacy Wealth Planning approach can help protect your family from our litigious society.
Written By: The American Academy of Estate Planning Attorneys