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How can you increase asset longevity through your estate plan?

On Behalf of | Nov 22, 2023 | Estate Planning |

When it comes time to create an estate plan, you might find yourself worried about how your loved ones will use the wealth that you’ve worked hard to accumulate over the years. This is understandable. After all, you’ve probably heard stories about inheritances being misused and squandered away in short order, but one of the great things about estate planning is that you can take control of the process in its entirety. As a result, you can create your estate plan in a way that ensures the longevity of your estate assets.

Estate planning tools to maximize asset longevity

If making your wealth last is important to you, then you need to consider which estate planning vehicles are best suited to help you attain that goal. Here are some of your options:

  • Spendthrift trust: This trust is utilized by those who are worried about inheritances being quicky spent down. Here, trust assets are paid out incrementally, thereby ensuring that the trust’s wealth isn’t quickly eroded away. Payments made from the trust can provide significant financial support, so you’ll still be taking care of your named beneficiary, just in a more controlled fashion.
  • Discretionary trust: Like a spendthrift trust, assets in a discretionary trust are slowly released over time. The difference is that with a discretionary trust, asset distribution is controlled by the trustee. So, the trustee will decide when assets are released and in what amount. If you decide to use this type of trust, you’ll want to make sure you name a someone you trust to act as trustee.
  • Incentive trust: Another way to control your wealth and ensure a bit of longevity is to tie release of trust assets to a pre-identified event. Through an incentive trust, you can specify that assets will only be released to a named beneficiary when they marry, have a child, graduate from college, hold a full-time job for a set period of time, or even complete some sort of counseling or treatment. You have a lot of flexibility here when it comes to identifying those triggering events.
  • Generation-skipping trust: A sure way to ensure that your wealth lasts long-term is to give it to your grandchildren, completely skipping over your own children. This can also have tax benefits that you might find enticing, but you’ll want to be prepared to discuss with your children why this wealth wasn’t given to them, as it can give the wrong perception and create family conflict in some instances.

There are other steps you can take to protect the longevity of your wealth. For example, you can be more selective about beneficiary designation, ensuring that you’re not leaving assets to someone you know will quickly spend them away. You can also use remainder trusts and charitable trusts, both of which can give you greater control over where assets go and how they will be used over time.

Take control of your estate plan

You have a lot of options when it comes to creating your estate plan. To make the decisions that are best for you, your assets, and your family, you need to inform yourself about what each option entails and which are best suited to help you reach your goals. Fortunately, there are a lot of resources out there that you can turn to for assistance, and guidance can be sought from your attorney. By being diligent, you can confidently create the estate plan that’s right for you.