Trusts for a Lifetime
Ten or more years ago, a widower came to see me about his estate plan. He was concerned that at his death, his only child, a lovable but irresponsible minor son, would squander or lose his inheritance. I suggested a trust for the son with a responsible trustee standing between the son and the money. My client liked the trust idea and we began to discuss specifics. I asked when the trust should end, and the trust funds be distributed to the son. His answer: “Age 65!” I was a little surprised (the usual response is age 25, 30 or 35). We discussed the pros and cons and he seemed satisfied with his decision. A few days later, the client called me and said, “I have been thinking about it and decided age 65 is way too long. Change it to 55!” I remember thinking I was glad he was not my father!
In an excellent Where There’s a Will column from the December 2017 Tennessee Bar Journal, Knoxville attorney Eddy R. Smith shares this observation and question: “Many of our clients make their first wills in order to name guardians and trustees for their minor children. Traditionally, trusts for minors contained a scheduled termination date, providing that the entire trust would distribute when the beneficiary reached a certain age or in installments over time. However, the divorce and creditor protections afforded by Tennessee trust law raise the question, should any trust include an automatic termination date?”
Lifetime spendthrift trusts have become a popular asset protection option for many families. Parents recognize their adult children are exposed to marital risks, creditor claims, addiction, disability and other financial disasters. Recent changes in Tennessee Trust law permit a spendthrift trust beneficiary to enjoy complete asset protection and enjoy liberal access to trust principal and income. The trust beneficiary can serve as co-trustee or even sole trustee of the spendthrift trust and still enjoy complete asset protection. With those benefits, why not continue the spendthrift trust for the lifetime of the beneficiary? In other words, my client’s first decision may not have been a bad decision.
Lifetime spendthrift trusts may not be right for every family. We simply want our clients to be aware of their options, so they can make an intelligent, informed decision.
If you have a minor or adult child and think a lifetime spendthrift might be an option for you, contact our office to request our free report on asset protection trusts, or schedule an appointment to discover the solution to your concerns.
, or schedule an appointment to discover the solution to your concerns.