How To Leave Assets To Loved Ones

By Dave Zumpano, Estate Planning Law Center

Charles came into the office to start his estate planning.  Charles was a widower and had no children.  The bulk of his estate was going to three nieces.  Charles had in excess of $750,000, and he wanted to ensure that when he died, his money went to his nieces quickly and avoided probate.  He heard a living trust was the way to do that.  When he came in to the office he discovered issues and options he had not previously thought about.  Specifically, he liked the option to ensure that when he passed, rather than leaving his assets to his nieces outright, he could give it to them in a protected trust that permits them to access to it for the rest of their lives, but not their creditors, spouses in divorce, nursing homes, the government, or lawsuits.

Charles engaged the attorney and set up his estate plan so that when he passed, each of his nieces would receive their $250,000.00 in a trust for their benefit.  The trust allowed each beneficiary to serve as trustee but also provided for a co-trustee, who could be appointed by each beneficiary.  When Charles died, his brother Frank came into the office to administer Charles' trust.  Frank was confused, as were his children, as to why Charles left the money in trust instead of outright.  They were a little disappointed.  After some explanation by the attorney, they said that they understood and proceeded with the trust administration.  Each of them received their separate share of uncle Charley's estate in a trust in which they were named trustee.

About a year later, Sue Ellen, one of Frank's children, contacted the attorney. She was concerned about a recent garnishment that had been put on her account at the bank.  Evidently, she had been sued and a judgment was awarded to the party suing her.  The creditor executed a judgment against all of Sue Ellen’s assets.  Since Sue Ellen was a trustee of the trust left by Uncle Charles, they also put a lock on the trust account in hopes that they could empty it to satisfy their judgment.  The attorney quickly explained to Sue Ellen that this is exactly why Uncle Charles had done what he did to ensure if any predators ever attempted to take the money from Sue Ellen, they would be prohibited. 

The attorney sent a letter to the law firm for the creditor and to the bank's attorney advising them any attachment to the account was unauthorized and illegal.

After a quick review of the trust, both the judgment holder and the bank acknowledged the account was not subject to levy and released it.  The funds remained available for Sue Ellen’s use without the risk of any further attachment by the judgment creditor or anyone else.

You can protect your loved ones when you die to ensure when they inherit what you have worked your lifetime for, it stays with them without being at risk of being lost to their divorce, lawsuits, nursing homes, the government, or other creditors.

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