You may want to think twice before leaving an outright distribution and gift

By Katya Sverdlov
Founding Attorney

There are many things that can go wrong with an outright distribution:

1. Judgment creditor can seize a beneficiary’s inheritance

2. Bankruptcy court can seize a beneficiary’s inheritance

3. An incapacitated beneficiary can squander an inheritance before anyone can step in to help him.

4. A divorce court can award some of the beneficiary’s inheritance to an ex-spouse

5. If the beneficiary doesn’t plan properly himself, his spouse’s family can receive your money

A lifetime discretionary trust, set up either during your life or through a Will, can mitigate against some of these risks. Some of the benefits of a lifetime discretionary trust include:

1. Protection from beneficiary’s liabilities

2. Protection from beneficiary’s divorce

3. Protection during beneficiary’s incapacity

4. Protection from beneficiary’s profligacy 

Talk to an estate planning attorney to see if setting up a lifetime discretionary trust may be beneficial for your family.

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.

About the Author

Katya Sverdlov, Esq., a Chartered Financial Analyst (CFA®) and attorney, founded Sverdlov Law to provide personalized legal services in estate planning, probate, elder law, and business succession. With 12 years on Wall Street, she manages complex financial matters. A Cornell University and Brooklyn Law School graduate, she also lectures, writes, and volunteers.