Don Carey’s Story
Don Carey died at the age of 78 with three surviving sons, all of whom were in an ongoing battle with addiction at the time of his death. Wanting to care for his sons in the event of his death, Don included a provision to his trust that stated that his three sons could each receive their $350,000 inheritances outright so long as they could prove to the trustee that they were sober for at least one year.
His middle son was able to defeat his addiction and get clean well before the one-year deadline, but he had just turned 18 at the time he received his inheritance. He married a young woman who was in active addiction at the time, had his first child, and used his entire inheritance to buy his family a new vehicle, a new house, and everything that his newborn baby needed in order to provide a stable environment for them. He found himself stuck with a house that is only half his, working a full-time job and pursuing his Master’s degree while taking care of his sick wife and newborn baby—with nothing left from his inheritance and no financial support from his wife.
The oldest son was able to get clean for one year, received his inheritance, and then ended up in a full-blown relapse within 21 days of receiving that money. The youngest son has yet to receive his inheritance as he is still battling his addiction and trying to maintain a stable part-time job.
Perhaps they both manage to get clean at some point, and maybe the middle son is able to get himself out of that situation somehow by selling off assets or working multiple jobs while going to school and taking care of his newborn—but, is this really what their father would have wanted for any of his three sons? The answer is likely no, and that their father simply wanted to provide them with enough financial support to live comfortably and start their lives with a bright future in front of them. One way to ensure this happens is through a Lifetime Asset Protection Trust (LAPT).
What is a LAPT?
An LATP is an estate planning instrument designed to protect your children’s or beneficiaries’ inheritance from creditors and certain issues that may arise upon your death such as debt, divorce, bankruptcy, lawsuits, or illness. This instrument allows you to have a trustee appointed to manage your beneficiaries’ assets for them in a way that can incentivize, educate, and provide them the best for themselves and for their futures.
What are the benefits of a LAPT?
- Protection in the event of Incapacity. LAPTs are managed by a named trustee rather than the beneficiary themselves; thus, if the beneficiary becomes incapacitated or suffers some other illness, the trust will continue to operate normally and that beneficiary’s assets will remain protected in the trust.
- Protection from creditors. LAPTs include a “spendthrift provision,” which limits the assets that can be accessed by the beneficiary or their creditors. In other words, this provision limits the beneficiary’s control over the trust assets and prevents the beneficiary from using those assets to secure credit, and prohibits payment to a beneficiary’s creditor if it extends credit to the beneficiary based on any future distributions held in the trust.
- Ensures control over the final distribution of assets. LAPTs are valid through the lifetime of your beneficiaries. With an LAPT, you are also able to specify what will happen to the remaining trust assets, if any, at the end of the beneficiary’s life. Whether that be to another individual, given to charity, or letting the beneficiary decide where the assets go upon their death—you are able to have control over the final distribution of the assets in the LAPT.
- Peace of mind. Setting up a LAPT will allow you to have peace of mind when it comes to your loved ones and their future inheritances that you wish to leave to them. This will ensure that the trust assets are monitored, controlled, and distributed to your beneficiaries how you want them to be distributed and when you want them to be distributed.
Conclusion
The way that you decide to leave your beneficiaries’ inheritance to them will determine whether those assets are subject to issues such as creditors, bankruptcy, lawsuits, and/or debt after your death. Setting up a LAPT can better protect your loved ones and provide for their future in a way that other estate planning tools simply cannot.
Springdale Law Group is one of a few law firms that ensure the well-being and future of your loved ones by assisting in drafting, setting up, and finalizing your Lifetime Asset Protection Trust. As a comprehensive estate planning firm, we are proud to provide this essential service to individuals and families who want to protect their assets and ensure that their loved ones’ inheritances are properly managed and distributed. Our team is fluent in English, Chinese, and Spanish and can assist with wealth management and estate planning in all 50 states. Don’t leave your family’s future to chance.
Contact us today and take the first step in securing a stable and loving environment for your children and your family, even if something were to happen to you. Let us help you make a plan that provides peace of mind before it’s too late. Provide the best gift you possibly can for yourself and your family.