- September 29, 2020
- Posted by: Matthew Luedke
- Category: Estate Planning
Thinking about setting up a Lifetime Trust?
After you initially create your estate plan, and after you’ve determined who receives which portions of your assets, you should also consider the actual process for how to go about distributing those assets.
Would you like to give the assets to all of your beneficiaries with a single lump sum payment, or would distributing these assets over time be a better fit for your family? If you determine that you want to create an asset protection plan for your own beneficiaries, it may be a good idea for you to create a “lifetime trust”.
A lifetime trust would apply to all trusts you establish and as the name implies – it is meant to last for the entire lifetime of the named beneficiaries. The lifetime trust can be utilized with an irrevocable trust, a revocable living trust, and even a testamentary trust.
We would recommend that you take a reasonable amount of time to consider the pros and cons of the lifetime trust option, especially if the named beneficiaries of your trust are going to be children.
The best part about forming a lifetime trust is simply the peace of mind you get from knowing that the beneficiaries of your trust are going to be able to use it for their entire lifetime.
Here are 3 reasons why you should consider using a lifetime trust:
- Beneficiaries won’t receive a standard outright distribution of a single lump sum. The money is designed to be kept in trust which ensures that beneficiaries won’t use all of the money in the trust too quickly. This can be a big problem for those who have trouble controlling their finances. Also consider that if a beneficiary receives everything at once but then decides to deposit the money into a joint checking account with their spouse, that money will then become “community property” and the spouse is going to be entitled to half of the trust amount. We’ve heard people refer to this kind of trust as a “built in prenup” for your beneficiaries.
- Beneficiaries of a lifetime trust are eligible to receive distributions from the trust whenever necessary for health, education, maintenance or support. The trustee also has judgment over the distributions made to the beneficiaries.
- If at any time a beneficiary gets sued or is divorced, creditors, or even an ex-spouse will not be able to get to the money held within a lifetime trust.
If your family is thinking about creating a lifetime trust, we highly recommend consulting our estate planning attorneys to make sure your trust is set up according to the latest revisions to Washington & Idaho State statutes. Call us at 509-328-2150 to get more information. Or checkout this article from CNN on the various types of trusts available.