Estate Planning

“We’ve raised fiscally responsible children!  Now that they’re adults, with their own lives, we don’t see the need to leave our legacy to them in a trust.”  (This article on Estate Planning first appeared in our Second Quarter 2014 Your Family CFO Report.)

Leaving your assets in a trust to your children provides a layer of asset protection to the inheritances you are bequeathing to them.  The trust, if structured correctly, would keep the inheritance out of divorce proceedings, limit the availability of funds to invest in bad business deals, or if something were to happen to your child, help you control the flow of your assets to your grandchildren, instead of to in-laws. Even outside of these, something like a car accident could leave outright assets at risk for lawsuit.

We are seeing a trend of parents leaving their assets in trust for their children’s lifetimes, instead of an outright distribution or even the dissolution of the trust at specific ages or milestones (college graduation, for example.)  Even the most fiscally responsible children can quickly deplete an inheritance.  A lump sum amount can be overwhelming.  Sometimes their spouses aren’t as fiscally responsible as they are.   Sometimes their childhood friends have a ‘can’t fail’ business idea that just needs funding.  Sometimes a passing comes too soon, and a large lump sum to a 19-year-old in their second year of college is more than they can manage.

A trust allows you the freedom to stipulate distributions, name trustees, and decide what happens if your child should pass before the trust is exhausted.  You have the capability to even allow the child to become a co-trustee; although an independent, non-related trustee does provide an additional layer of protection to the assets.

Leaving the assets in a trust is not a matter of ruling from the grave, but a way for you to continue to teach your children after you’re gone.

Thank you for reading your Family’s CFO Report. Please call us anytime with questions at 404-874-6244 and feel free to pass our message along to friends.

All references in this publication referring to our average allocation or “typical portfolios” reflect those of the fully discretionary accounts of clients with moderate risk profiles. Actual client portfolios are tailored to individual client circumstances and asset allocations may vary.  Any reference to returns reflect the performance of asset classes, are for illustration purposes only, and do not reflect the returns of any specific investment of Smith & Howard Wealth Management. No representation is made that any investment decisions discussed herein have been profitable in the past or will be in the future. Past performance is no guarantee of future results. A list of all recommended investments is available upon request.

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