Westchester, New York Attorney Advises on Structuring Inheritances for Spendthrift Heirs
Trusts designed to protect assets from beneficiaries’ creditors
We all know people who either have no sense about money or have had terrible luck managing it. When it comes to legacy planning, there can be a real conflict between your fondness for a relative and persistent evidence of their wasteful spending habits. While you’d like to be of assistance to a loved one in financial need, you wonder if it wouldn’t just be throwing good money after bad. Fortunately, trust law provides options that may allow you to offer a reasonable amount of assistance without enabling dissolute spending. At the Cormac McEnery Law Firm, we design spendthrift trusts to facilitate managed legacy gifts. With our assistance, you can leave an inheritance that has a lasting, positive impact.
Trusts attorney in Westchester and City Island, NY protects the value of your bequest
A spendthrift trust provides periodic income for the named beneficiary, but prohibits the beneficiary from assigning present or future income from the trust or selling his rights to the principal. Those safeguards prevent a beneficiary’s creditors from gaining direct access to the trust funds and depleting its value. The trust is appropriate for a variety of beneficiaries, from shopaholics to gullible innocents whom scam artists might easily target. In New York, all trusts are presumed to be spendthrift trusts, but you can add special language to tighten control of funds even further.
However, there are certain circumstances under which a creditor can access trust funds:
- Unpaid federal taxes — The IRS can place a lien on the trust assets.
- Unpaid alimony or child support — A court may order payment from the trust for unmet obligations.
- Creditor court judgment — A creditor can garnish a percentage of the beneficiary’s income from the trust.
These trusts allow the beneficiary to have a minimum level of income while keeping poor financial management in check. You can also set up living trusts to manage other concerns, such as keeping your home in the family and securing inheritances for children from a first marriage.
To protect your intended beneficiaries, contact our Westchester law firm
A spendthrift trust can protect trust assets from a beneficiary’s wasteful spending habits. The Cormac McEnery Law Firm regularly drafts trusts with the appropriate provisions for our clients throughout the five boroughs of New York City, as well as Westchester, Nassau and Suffolk counties. To schedule a free consultation, call us at 888.368.4329 or contact us online.