Lifetime Benefit Trusts

Thousand Oaks Estate Planning Lawyers

If you are looking for a solution of how to pass on assets to beneficiaries who may not be old, stable, or mature enough to properly manage an inheritance,  our attorneys can guide you in the creation of a lifetime benefit trust to protect the assets and minimize taxation.

Objectives of a Lifetime Benefit Trust:

  • Provide asset protection for an inheritance from issues such as divorce, lawsuits, or bankruptcy
  • Keep an inheritance free of federal estate tax
  • Pass the inheritance free of probate

lifetime benefit trusts

How it works:

  • Avoid leaving an inheritance outright to a beneficiary (leaving an inheritance outright causes the assets to be “owned by the beneficiary” and subject to any legal problems the beneficiary might encounter such as tax liens, lawsuits, bankruptcy, and divorce)
  • Instead, place the inheritance in a trust (leaving the inheritance in a trust causes the assets to be “owned by the trust” rather than by the beneficiary which facilitates asset protection for the beneficiary. Since the beneficiary is not the owner (but rather “user”) of the trust assets, if the beneficiary is sued the trust assets are not available for attachment
  • Trust terms allow the beneficiary to use the beneficiary’s inheritance for life (the beneficiary has full use of all the assets (house, car, income stream from investments) and can cause the assets to be sold and new ones purchased
  • Upon the beneficiary’s death, any inheritance remaining will be transferred to family members. The lifetime benefit trust may allow the beneficiary to designate the recipients of any assets remaining in the trust at the beneficiary’s death, during which time the assets transfer without a court probate and are not included in the beneficiary’s estate for estate tax purposes.

Read more about the various types of trust options available. Call our law firm today at (805) 496-4681 if you have questions or believe a lifetime benefit trust is a good solution for you to pass on an inheritance.