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Extended Trusts: Conserving Your Estate for Your Beneficiaries

Date:  Mar 02-2015

You have worked hard to earn, save, and grow your assets during your lifetime.  When you pass away, do you really want all of your estate to be distributed to your beneficiaries immediately, and all in one lump sum?

Let’s say that you have one child named Susan who just graduated from college.  If you expect to leave Susan a substantial amount when you pass away, such as $500,000 or more, we recommend that you consider having an extended trust in place.

Even if Susan is financially responsible, there are many advantages to including extended trust provisions in your revocable living trust.  Once Susan turns age 35, for example, she can receive one-half of the trust assets, but then the rest remains in your trust.  Although Susan can receive income automatically during this time, the principal will stay as a trust asset and continue to grow.  Then once Susan turns age 60, she can have a right of withdrawal so that if she needs the trust assets, she can access them, but if she does not need them, she simply leaves the assets in trust.  Especially since so many individuals do not have significant retirement savings, creating this type of safety net would ensure that your child conserves at least some of what she inherits.

Further if some of your assets remain in trust for an extended period of time, Susan can maintain the relationships you developed with your accountant, financial advisors, and other professionals.  Susan has an incentive to learn about and monitor the trust investments, which in turn may motivate her to manage her own assets in a similarly responsible manner.

Because this type of trust may be in place for decades, it is prudent to consider appointing a corporate trustee.  A corporate trustee can either act as sole trustee or as a co-trustee with Susan, and both can act together.

If you are interested in learning more about extended trusts, please give us a call.  We can tailor your trust to achieve your goals, and to give you peace of mind that your assets will be around for your beneficiaries’ benefit during their lifetimes.

By Courtney A. Martin, Esq.
Law Offices of James F. Miller, P.C.