The best way to pass significant assets to the next generation is in trust, as opposed to outright.  But some folks think it’s wise to have the trust distribute assets at certain times.  It’s isn’t.  Never, ever, never, ever force assets out of your child’s trust.

Why?  What’s Wrong with Trust Distributions?

It’s a common question.  “What’s wrong with trust distributions?  I don’t want to control from the grave or bind my children’s hands.”

There’s absolutely nothing wrong with trust distributions.  There is a lot wrong with forced trust distributions.

What are Forced Trust Distributions?

Forced distributions are those that are ordered by the trust.

For example:

• 1/3 of the trust assets shall be distributed when my beneficiary attains the age of 30; another 1/3 third shall be distributed when my beneficiary attains the age of 35….

• 25% of the trust corpus shall be distributed outright to my beneficiary at 5 year intervals starting 5 years after the date of my death….

Consequences of Forced Trust Distributions

Forced distributions are bad news.  They can be seized, wasted, and even hurt your beneficiaries.  Forced distributions are:

• Attachable by Creditors
• Subject to Spendthrifts (i.e. Money Wasted)
• A Danger to Beneficiaries with Addictive Problems

Please continue reading at Part 2 of this article, Never, Ever, Force Assets Out of Your Child’s Trust, for details on the consequences of forced trust distributions and the easy alternatives.   Questions?  Consult with a qualified estate planning attorney.   

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Tags: Asset Protection, Inheritance Planning

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