Most living trust beneficiaries receive their inheritance “outright,” meaning it is distributed from the trust directly to them, so that they effectively own the inherited assets. Unfortunately, by “owning” their inheritance, your beneficiaries are then needlessly exposed to the claims of spouses in divorce, creditors, lawsuits, the loss of government needs-based benefits and potential estate taxes when their inheritance is handed down to the next generation of beneficiaries.
Instead of receiving their inheritance directly, each of your beneficiaries may instead receive their inheritance in a special trust, which springs out of your living trust. This continuing “Personal Asset Trust” (or “PAT”) can be controlled by each beneficiary in such a manner as to virtually give him or her all of the same rights as ownership, without the liability exposures ownership brings.
With the Personal Asset Trust, each beneficiary has the option to be his or her own initial Trustee and be in charge of his or her own Personal Asset Trust. The beneficiary may control the investing of his or her inheritance, how and when it is distributed and even who may receive it when that beneficiary passes away. One of the major benefits of the Personal Asset Trust is its adaptability, in that the level of asset protection needed may be determined by looking at the beneficiary’s circumstances at the time of inheritance, with the benefit of 20/20 hindsight. For example, if a moderate or more advanced level of protection is necessary, an independent Co-Trustee or Trust Protector may be brought in to co-sign on transactions or temporarily lock down the trust from outside parties. In either case, the beneficiary may continue to indirectly control his or her inheritance, while enjoying additional asset protection.
If you are interested in learning more about how the Personal Asset Trust can provide additional protection for your beneficiaries, please contact our office to schedule a free consultation with one of our attorneys.
Allyson S. Heller is a licensed attorney at the Law Offices of Tony J. Tyre, ESQ, APC. For more information, please contact our office at (626) 858-9378, or aheller@tyrelawgroup.com.
