By: Laurie Valentine- COO & Trust Counsel
A Christian estate plan is one you develop by determining how God wants you to: (1) provide for your family and other “dependents” at your death and (2) have your finances managed and decisions made for you if you became incapacitated and no longer able to do those things for yourself.
Step #7 Use Trusts to Help Beneficiaries Handle Their Wealth. Leaving an inheritance outright to a young or incapacitated beneficiary is not good estate stewardship.
An outright bequest or beneficiary designation to an under age 18 beneficiary will require a guardian be appointed to manage the young beneficiary’s share until he/she reaches age 18. This is the case even if there is a parent surviving. At 18, the young beneficiary will receive full ownership and control of the outright inheritance, no matter its size.
A better alternative may be to use a “testamentary trust” as part of your plan.
A testamentary trust is a bequest in your Will to a third party designated as “trustee” to manage the young beneficiary’s share of your estate. The trustee can be authorized to use income and principal of the young beneficiary’s trust for his/her education and other needs. And, by using a testamentary trust, you can delay when a young beneficiary will get full ownership and control until an age older than 18.
Testamentary trusts may also be used to provide for an elderly or incapacitated beneficiary. The trust can direct all income (and possibly some principal) be used for the beneficiary for the rest of their life; with the remainder designated for an “ultimate beneficiary” of your choosing after the elderly or incapacitated beneficiary dies.
Next Month-Step #8- Plan for Death Taxes
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The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.