The assets you pass on to your children can make a massive difference in their lives. Financial assets can help pay for a college education or make a down payment on a house.
However, without proper planning, the assets you want to go to your children could go to someone else, such as an ex-spouse or a creditor. A Delaware trust can protect your child’s inheritance.
Why is a trust beneficial?
There are many reasons why a trust is beneficial, but the one to consider in this context is that your child will not own the trust directly. The financial assets within that trust are owned by the trust itself. This means that, in most cases, no one else can take this money away.
For instance, maybe you know that you have an heir who has outstanding credit card debt. Odds are that the debt is going to be sent to collections and the collections company is going to try to force your heir to pay. If you gave them the money directly, they would have to use it to pay off that debt collection case. But if you put the money in the trust, then the collection company cannot take it.
The trust establishes who owns the money
If you’re worried about your heir getting married and then divorced, thereby losing some of the inheritance to their ex-spouse, a trust can also be helpful because it clearly establishes that the money was intended only for your heir. This means that it should not be subject to property division in the case of a divorce. You want all of those financial assets to stay within the family, and a trust helps to make sure that they do.
It is possible for your heir to commingle their financial assets with those owned by their spouse, thereby giving up their sole claim. But if the money is being held in a trust, then you know that this is not going to happen and you don’t have to worry that they’ll make an unintended mistake.
Setting up your plan
You can see why it’s so important to plan in advance to put your heirs in the best possible position for the future. Make sure that you know about all of the legal steps you can take to set up a plan that does so.