Estate planning and trusts are all about planning, not only for your own future, but also the financial well-being of your family and loved ones after you’re gone. However, the reality of life can often get in the way of a smooth transition – divorce, second marriages, step kids, long-term illness and other family changes can sometimes make life and plans unpredictable.
Protecting your wealth & assets and the financial well-being of your family is about a lot more than simply parcelling-out your assets – it’s about providing for yourself & your family members in a way that’s responsible and specifically addresses your personal situation.
Many people make the assumption that estate planning and trusts are only for incredibly rich people. That is wrong.
A family discretionary trust is a very versatile estate planning tool that allows you to address inheritance goals for your beneficiaries – who may still be children, are disabled, are from a mixed family – and a trust might be the answer to difficult questions like who will manage your assets if you or they become incapacitated.
Typically, when a child inherits money, it is invested for him and held until he or she turns 18 or older. Of course, giving a young person access to a large amount of money at the age of 18 can be dangerous and detrimental to their long-term financial health if they lack maturity or sufficient financial wisdom. Some parents think that the lure of fast cars and endless parties may be too great a temptation for their beneficiaries to handle at age 18, and so they specify an older age, frequently 21 or 25.
A well-set-up trust for minors will hold the assets until the child comes of age, and it also allows you to stipulate at what age they may receive the funds, whether those funds will be given at once or in instalments and how the inheritance can be used. For example, some people stipulate that trust funds must be used for education expenses only until the child reaches the set age. A trust can legally protect the inheritance from potential squandering or mismanagement.
If you are caring for a child or a dependent with special needs (mental or physical) whom you expect to outlive you, then setting up both a Special Needs Trust and a testamentary trust in your Will should be considered as part of your estate planning. It’s important to recognise that these trust funds may be interpreted as a deemed source of income which could potentially interfere with Centrelink and Medicare benefits.
Illness, death & taxes may be inevitable, but they don’t have to ruin your family. Modern integrated estate planning and trusts can help address a number of family issues, but don’t leave it until it’s too late.
Rod Genders is a senior Australian lawyer specialising in accident compensation and estate planning in Adelaide. His boutique specialist law firm is one of the oldest and most respected in Australia – visit it at www.genders.com.au . Rod is also a prolific author and speaker. Some of his articles and books on Wills, Probate, Trusts, Estate Planning, Asset Protection and Retirement Planning may be found at www.genders.com.au/adelaide-lawyer-blog.
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