Go take a look at your estate plan, and check what it says. If you don’t have an estate plan, give us a call and let’s get that handled for you the right way, so you can protect your kids and loved ones.
If you do have a plan and it distributes your assets outright to your kids – the most common distribution pattern suggested by estate planning attorneys is in stages over time, some at 25, then half of what’s left at 30, and the balance at 35 (or something along those lines). If this is the plan you currently have in place, you’ve overlooked an incredibly valuable gift you can give your children (and the rest of your descendants for generations); a gift that only you can give them. A gift that, once you’ve died and left them their inheritance outright, is lost and cannot be reclaimed.
Leave your kids’ inheritance to them in a way that is protected from lawsuits, divorce, and estate taxes.
While you may think to yourself, my kids’ inheritance doesn’t need to be protected. They aren’t going to get sued and I trust them to make wise decisions. You may be right, but you may also be overlooking one of the most common “lawsuits” that causes inheritances to be lost…divorce. As a recovering divorce attorney and litigator of nearly twenty years, I’ve had a front row seat to countless cases where an inheritance is divided between divorcing spouses. The simple act of depositing your inheritance into a joint bank account and “commingling” it with their everyday income and spending, “transmutes” that property from “non-marital property” to “marital property,” and subjects it to division in a divorce. If you want to protect the money you are leaving to your children from being lost in a divorce, you can easily do so using a protected trust.
On the off chance your child is ever involved in a lawsuit, for let’s say…a simple car accident or a business transaction gone wrong, what you leave behind to your child can also be protected from future lawsuits or claims from their creditors.
The best part is that if your child has their own taxable estate when they die, getting your plan in place now could save your family 40 cents on every dollar (or more) handed down from one generation to the next.
How can you avoid unnecessary taxes for future generations of your family?
As of 2023, the current federal estate tax rate is 40% — meaning that every dollar you leave behind over the estate tax exemption rate is taxed at 40%. In the past, this number has been as high as 55%, by the way. On top of it all, many states have estate or inheritance taxes that are in addition to the federal estate tax that your family will have to pay, including Illinois.
Let’s be honest, no one wants to pay Uncle Sam if they can avoid it. Not to mention, the numbers add up quickly and can decimate your family’s financial legacy over time. Think about it, you’ve worked your entire life, you’ve painstakingly saved and allowed your investments to compound for decades, all so that you and your spouse can comfortably retire. Over forty years, your smart and responsible choices have paid off and you’ve acquired a nice chunk of money to retire on and hopefully, leave behind to your children one day. Now consider that if you or your children have more than the estate tax limits when you die, for every million dollars that is left behind, your children or grandchildren will only receive $550,000, with $450,000 going to the government … unnecessarily.
If you want everything you’ve worked so hard to build over your life to stay in your family for generations to come and not be lost to outsiders or taxes…you should consider avoiding leaving your inheritance to be distributed outright and instead, leave your assets to your children in a trust that we call a Lifetime Asset Protection Trust. This planning tool can easily be built into your existing estate plan or trust, all you need to do is give us a call and we’d be happy to help protect your wealth for generations to come.
But how will my kids get to use what I leave to them?
Here’s the best part about leaving your assets to your children in a Lifetime Asset Protection Trust…Not only is what you leave behind protected, but your children gain control over their inheritance at an age that you decide they will be ready and responsible enough to do so.
After your death, the assets you leave behind will pass to your children (and your grandchildren, great-grandchildren, and so on for successive generations) in a Trust that your child can control, as the Trustee of the Trust. You can decide when your child is mature enough to act as a Trustee.
As the Trustee of the Trust, your child then decides how their inheritance is invested and what to do with the Trust assets. And your child will even be able to determine the amount of control vs. the amount of asset protection he or she wants based on his or her specific circumstances.
Is this still important if I don’t have much money?
If you only leave your children a small amount of money, this is still incredibly valuable for protection. If you are leaving assets that can be invested and grown, it can also prevent this money from simply being spent right away on “things.” Some might say it’s even more important to protect these funds if you don’t have much money because your family has less to lose to taxes, lawsuits, and divorce. Not to mention, the impact of those losses is much greater on your children’s overall financial well-being. So, instead of a small amount being quickly spent on a car, home repairs, or something that will be quickly forgotten, your children’s inheritance can be left to be invested and grown until they are responsible enough to take over management. Over time, this money can create generational wealth for your family, so that it is available for your future grandchildren and great-grandchildren.
A mere $10,000 protected now can become millions for the people you love for generations to come.
Imagine that you leave just $10,000 to your child in a Lifetime Asset Protection Trust, and instead of spending that $10,000 or losing it in a divorce, they invest that $10,000 to create their own business inside their trust. Over time, their business takes off and grows into a million dollar or multi-million dollar venture because of how you chose to leave your child that $10,000 gift … and on top of it all, it’s fully protected for generations to come.
Secure the future of your family today by giving us a call. As your Personal Family Wealth & Legacy Lawyer™, we will walk you through our proven process to ensure that you are aware of all of your options and can put a plan in place, so that future generations of your family can enjoy the benefits of your plan and wishes. Don’t wait, get a plan in place now that will give you the peace of mind of knowing that you’ve made the right choices for your family. Contact us today to get started.