South Carolina residents who are going through the estate planning process will want to know the best ways to leave an inheritance to loved ones. Taxes, lawsuits and divorces can force a child or grandchild to give up the majority of the money left to them. However, there are ways to circumvent these potential issues.
Creating a trust in which the child is the trustee helps to solve this problem. Since a trust is only designed for the person who is the trustee, it cannot be taken by others. For example, a trust in which the child is named as the trustee is not considered marital property. Should a child get divorced, the trust would only be in his or her name and would not be divided with their former spouse.
Trust protectors are another solution to the problem. These are designed to protect a child’s inheritance if a threat should appear. Siblings are often named as trust protectors. This would help grandchildren receive an inheritance should the trustee die, preventing stepparents from stepping in and taking the money. Living trusts are commonly used today over testamentary trusts for this purpose. Life insurance policies can also be put into a trust. This offers additional asset protection to the beneficiaries.
Someone who owns a considerable estate may have worked a lifetime to leave their loved ones an inheritance. This can make it difficult to imagine the money being taken by others through taxes, frivolous lawsuits or divorce. Setting up a trust with a protector is one way to avoid some of these issues. An estate planning attorney may offer valuable guidance. Legal counsel could help develop strategies that might lower estate taxes.