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Could your family benefit from a spendthrift trust?

Imagine you're a multimillionaire with a son who has an addiction problem. Imagine you have $700,000 saved in the bank and your daughter is a shopaholic who couldn't save a penny if her life depended on it. In these situations, if you're wondering how to set up your estate plan, you might want to consider a spendthrift trust.

A spendthrift trust is exactly what you've heard about in the movies. It is a trust fund that slowly doles out the inheritance of a particular beneficiary over time. Perhaps it gives your heir $3,000 per month for the rest of his or her life. Perhaps it gives your heir $1,000 a month for the rest of his or her life. Then, if there's any money left over, the balance could go to the charity of your choice.

Alternatively, you might put disbursement plan on the trust that will be in effect until the individual reaches 25 or 30 years of age. Only then will he or she have full access to the funds. You can organize the disbursement of a spendthrift trust in thousands of different ways that might suit the unique needs of your heir, yourself and your family. The bottom line is that spendthrift trusts can solve a lot of worries that you face regarding the way your beneficiaries will be able to handle the assets you leave behind.

If you want to set up a spendthrift trust for your loved one, make sure you fully investigate the numerous options available for these special kinds of trusts. With a solid spendthrift trust in place, you can rest assured that your estate plan and assets will be handled exactly as you hope.

Source: The Balance, "How a Spendthrift Trust Can Protect Your Heirs From Themselves," Joshua Kennon, accessed March 30, 2018

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