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Beneficiary Vault Trust

Give your children protection from creditors, lawsuits, and divorces.

Most living trusts are designed to avoid probate.  But modern trusts are coming with a new feature – protecting your beneficiaries against creditors, lawsuits and divorcing spouses.

Many people don't know is that they are leaving their children's inheritance exposed to major financial risks - something they can prevent with proper planning.

The “Old” Way Of Estate Planning

Most beneficiaries of a Living Trust are going to receive their inheritance “outright” – either immediately, or in certain stages.  Your assets are distributed directly from your Living Trust to the names of your beneficiaries.

Exposed Assets

Any property in your name is exposed to any financial problem you face – creditors, lawsuits, bankruptcy, divorcing spouses – you name it, you are exposed to all the financial germs floating around.

Lawsuits

The sad reality is that we live in a highly litigious (“sue happy”) age.  Does a lawsuit have to be valid to cause your beneficiary to lose sleep, and still cost tens or hundreds of thousands in attorney fees?  Of course not.  And, if you have property to go after, you are a much more attractive target for these unscrupulous lawsuits.

Divorce

Even in California, with our community property rules, it is easy to lose inherited money.  Any halfway decent divorce attorney knows a dozen ways to go after inherited assets.  It is easy for beneficiaries to lose any protection with simply spending the money on this and that.  And if your children live or move to another state, the minimal protection we have in California may be non-existent.

Bankruptcy

Maybe the real estate market crashed, maybe they made some bad investments, or simply built up too much debt – whatever the reason, your beneficiary may find themselves filing for bankruptcy.  If they’ve inherited their money (or retirement) directly, all of those assets are subject to the bankruptcy trustee.

The “Vaccination” – The Unique “Beneficiary Vault Trust(sm)”

Your beneficiaries face big financial risks every day that many plans don’t protect them from because the plans use outright distributions.  Most estate planning attorneys will simply ask you, “Do you trust these people to handle money?”  And you say yes, and so the plan gives them all their money directly, leaving them exposed to these financial risks.  The sad thing is, it is entirely preventable!  There is a better way to do it, even when a beneficiary is fully capable of handling money on his or her own.

Vault Trust Chart

 

Please note that the “Beneficiary Vault Trust” does not alone guarantee “bulletproof” asset protection for your
beneficiaries, but it does add much-enhanced protection over the typical Living Trust’s provisions.
Other, more advanced planning measures, such as Family Limited Partnerships (“FLPs”), Limited Liability Companies (“LLCs”) or Irrevocable Trusts may be warranted if you desire an even greater level of asset protection.