There are simple steps you can take now, as part of your estate planning, to secure a loved one’s future – steps that help ensure assets received by them on your death, stay in their possession even if claims are made against them or they prove to be poor money managers.
Most of us work hard to accumulate assets during our life. We generally wish to provide an enduring nest-egg for our family when we die.
But what security do we have that the assets, once gifted to beneficiaries, will be retained by them and not snatched by third parties? If a beneficiary has a legal claim made against them, the assets you fought hard to accumulate might diminish. They might also be squandered if your beneficiaries are immature, prone to addiction or substance abuse or have mental health issues.
Common claims include those made by an estranged partner when a relationship breaks down, or by creditors when a business fails. Assets you have accumulated over a lifetime may end up in the hands of an ex-partner or business creditors, such as a big bank or shopping centre landlord.
The inclusion of a testamentary trust in your will may mean the difference between a legacy that endures for life and provides a reliable safety net, or a gift that slips through your beneficiary’s hands.
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Financial disaster, due to unwanted challenges against the estate.
Themselves, if they are vulnerable, addicted or unable to manage their money responsibly.
Loss of inheritance due to a beneficiary’s relationship breakdown in the future.