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Protecting Assets Across Generations Part 4

Protecting Assets Across Generations Part 4

20th February 2020

This is the fourth and final article in a series addressing the ways in which the wealth you have accumulated during your lifetime, or inherited upon the death of another person, can be needlessly lost.  We examine ways that the risk of this loss can be reduced or prevented altogether.

What are the risks?

We have previously looked at the possibility of your hard-earned wealth being reduced or lost because you passed that wealth on to bankrupt beneficiaries or being lost to your beneficiary’s estranged partner or spouse when property is divided after a relationship breakdown.  We have also looked at ways to preserve the inheritance left to disabled persons, without effecting their social welfare entitlements.

This article reviews a final category of persons – those who cannot manage money or should not have control of their funds, because this factor alone may result in loss of accumulated wealth.  Today we examine protecting beneficiaries and their inheritance from themselves.

 Who may need protection?

While fools and their money are soon parted, it is not just the foolish and easily influenced spend thrifts who may need help in ensuring that inherited wealth is available to them and their descendants for years to come.  The drug addled and persons with gambling problems may also squander cash and other assets gifted to them on their addictions. 

Long gone are the days where troubled people are exclusively from the wrong side of the tracks.  Children from good homes who have been given every opportunity to succeed in life can develop drug addictions yet their parents continue to want the best for those children, including ensuring the children have a house over their head long after the parents are gone.

Testamentary Trust

If you find yourself in a situation where one or more of your beneficiaries has drug or gambling problems, or you simply believe they cannot handle wealth of the nature you intend to gift to them, you will want to take steps to ensure that those beneficiaries have benefit of but not sole control over the assets after you are gone.  If this is you, contact Rapid Legal Solutions to discuss how a specially constructed testamentary trust can be of assistance.

What is a Testamentary Trust?

A testamentary trust is a trust established under your Will upon your death.  Instead of gifting your assets direct to your chosen beneficiaries, you gift those assets to one or more trusts established for the benefit of those beneficiaries.  Testamentary trusts have many asset protection and tax benefits.

It is usual for the main beneficiary intended to benefit from the testamentary trust to be its trustee and to have control of the trust, including having the power to appoint and remove the trustee.  This is not the approach that should be taken in the case of beneficiaries who need to be protected from themselves and their own actions.

We can work with you to determine who best to control your beneficiary’s inheritance following your death, and how involved your beneficiary should be in their testamentary trust’s management and decision making.

Talk to Rapid Legal Solutions today about whether a testamentary trust is right for you and your beneficiaries.

Other arrangements

Depending upon the assets you have available to leave your beneficiaries, a testamentary trust may not be the best option.  The lawyers at Rapid Legal Solutions have a number of tools available to them in addition to testamentary trusts, including life interests, rights to reside and the provision of annuities.

More Information

If you would like assistance or further information in relation to how to structure your Will or Estate Planning to protect it against spend thrift, drug addled or beneficiaries with a gambling problem, or some other beneficiary you do not wish to have unfettered access to their inheritance for their own good, contact Rapid Legal Solutions on (07) 4755 9100.

This document offers general information only and should not be relied upon as legal advice under any circumstance.  Please contact your solicitor for clarification on any areas.