When you create your estate plan, you probably want to keep control over your assets as much as possible. After all, poorly managed inheritances can quickly evaporate, and leaving your assets to one individual means that those assets could quickly pass out of your family line of succession, the latter of which is oftentimes the case when you’re in a blended family.
Fortunately, the estate planning process allows you to implement legal strategies that give you the additional control that you want. In order to take advantage of those legal maneuvers, though, you have to know your options.
Using trusts to control your estate assets in the long-term
Trusts are a great way to direct the distribution of your estate assets. And if you create your estate plan properly, then you can retain control over where those assets go and how they’re used, even well after you’re gone. Here are some trusts that you can utilize to achieve those goals:
- Spendthrift trust: If you’re worried about an inheritance being quickly wasted away, then you can use this type of trust to ensure that only minimum payments are made to your named beneficiary. This ensures that your assets will have longevity.
- Discretionary trust: Similar to a spendthrift trust, a discretionary trust seeks to extend the support that your estate assets provide. The big difference here is that the trustee who is managing the estate has the discretion as to when to release trust assets.
- Remainder trust: One of the best ways to control where assets will go in the long term is to use a remainder trust. Here, you name an initial beneficiary who will be supported by the trust for a specified period, which could be for the remainder of their life. Once that period passes, then, the trust specifies where the remainder of the assets should be directed. For example, you could leave your estate to your spouse for their lifetime with the remainder being distributed to your children from another relationship.
- Generation-skipping trust: As its name implies, this type of trust skips over your children, thereby allowing your grandchildren to directly inherit estate assets. While there are some tax savings to this strategy, it’s also a way to ensure that your assets will stretch further down the family line.
- Incentive trust: If you want your loved one to achieve a certain goal, then you can use your estate assets as motivation through an incentive trust. With this trust, the release of trust assets is conditioned upon the satisfaction of an identified triggering condition. You can get creative here, making the condition be anything from holding a job for a specific period, graduating college, getting married, having children, or even completing substance abuse treatment.
There are other estate planning tactics that you can utilize to ensure that you retain as much control of your estate as possible. That way, you can rest assured that your vision of the future for your estate and your loved ones will come to fruition.