Nevada residents, could a spendthrift trust benefit your heirs?
When Nevada residents do their estate planning, one possible option is a spendthrift trust for one or more beneficiaries. While this is not the ideal solution for all individuals, funding such a trust can provide trust grantors with the peace of mind they need to realize that their loved ones' needs will be met in the future.
Spendthrift trusts are treated much like other trusts under Nevada law. The key difference is that the beneficiaries do not have unfettered access to the principal of the trust. Also, the disbursements are handled solely by the trustee according to a preset schedule determined by the trust grantor.
Why such trusts might be necessary
Suppose that you have two grandsons whom you intend to name as beneficiaries. One has always been a solid citizen who has demonstrated over the years that he is fiscally responsible, financially solvent and on the right track in life.
The other grandson, however, is not. He's done more than dabbled in drugs, racked up multiple drunk driving charges and spent some time behind bars. While you love both grandsons equally and want to provide for both after you pass on, you realize that the structure of the legacy that you leave might need to be tweaked somewhat.
Enter the spendthrift trust
Providing differently but equally for both beneficiaries can be done using a spendthrift trust. You can draft the trust and appoint a responsible trustee to oversee it and the disbursements of funds as you see fit.
Many estate planning attorneys discourage their clients from appointing one beneficiary as trustee of the spendthrift trust for another beneficiary. The reason is that can create an imbalance of power between the two beneficiaries and foment bad blood between relatives. An alternative choice is to select an independent third party trustee to oversee the trust, thus allowing for the preservation of familial relationships.
Many estate planning options to explore
Spendthrift trusts have gotten somewhat of an undeserved bad reputation in some circles. People argue that these trusts are an attempt for the trust grantor to control their beneficiaries' lives from beyond the grave.
Proponents counter that this type of structured trust is necessary to prevent beneficiaries from blowing through their inheritances and possibly doing themselves or others terrible harm in the process.
As the trust grantor, you can weigh all of your legacy options with your Nevada estate planning attorney and devise the best plan to meet your and your beneficiaries' needs.