A few months ago, even the most embittered pessimist couldn’t have imagined hundreds of thousands of Americans losing their parents or guardians and their jobs at the same time. No one should have to navigate both bankruptcy and bereavement…and yet, here we are. As the Coronavirus pandemic spreads globally, all a person can do is hope for the best and prepare for the worst.
Here is some advice about how to prepare for the worst:
Shield Family Assets from Creditors
Businesses big and small are facing the danger of bankruptcy in staggering numbers. Meanwhile, the novel Coronavirus is impacting the elderly more so than on any other age group. Don’t let creditors eat up your parents’ or loved ones’ estate should you find yourself in the tragic position of losing them just as you face bankruptcy. A testamentary trust is the best protection against such an injustice.
How-To: Set up a Testamentary Trust
A testamentary trust can be a part of a person’s last will and testament as well as the distribution provisions of their living trust. The maker can create a testamentary trust for each of their heirs at the same time as they draft their will or trust. In doing so, restrictions are placed on how and when assets may be distributed to beneficiaries. Typically, these take the form of withholding inheritance until the beneficiary turns 25, graduates from university, or similar, and may also include guidance about spending decisions. These trusts can terminate at a given age or provide lifetime protection. Ultimately, it falls to the trustee in charge of the trust to ensure such wishes are respected.
Appointing a Trustee
While you may appoint any adult to act as a trustee, it is important that you choose someone you trust to act in the best interest of your beneficiaries. Keep in mind that this person should be healthy and fit to carry out the task. When you die, your trustee will be in charge of investing trust assets, providing accountings, and ensuring that beneficiaries receive and use funds in accordance with the terms dictated in the trust.
If no one close to you seems like a good fit, hiring a professional trustee is an option. The benefit here is that you can rest easy knowing your estate will be distributed impartially and in strict accordance with your terms. The drawback is that sometimes such strict accordance is too insensitive a tool for handling a matter as intimate as your life’s work. Furthermore, professionals come with fees and many are only interested in larger estates.
Special Handling for Retirement Accounts
If a large portion of your estate is in retirement accounts, consider a special Standalone Retirement Trust or IRA Trust, created to receive your retirement accounts. The trusts can ensure that your hard-earned funds are not only protected from creditors, but also from the mistake of early beneficiary withdrawal.
If you don’t yet have a last will and testament or living trust, you’re not alone. Only one third of people in the U.S. say that have a will or some sort of estate plan. Even if a deadly virus weren’t sweeping the world, this would be a scary statistic. Join the minority of adults who have taken steps to protect their family’s financial future by getting your affairs in order.
Before contacting an experienced estate attorney, you’ll want to survey your assets. This means making a list of everything you own, including property, financial accounts, vehicles, and digital assets. Consider who you want to designate as beneficiaries, what terms you might impose on their inheritance, and who might be a good candidate to serve as executor of your estate. Don’t worry about getting it all right; a good lawyer will ensure that you’ve crossed all your T’s and dotted all your I’s.
Finally, seek out an attorney you trust and get started! If there were ever a time to protect your assets, it is now. In moments of instability, it helps to settle those things that remain within our control.
Contact Attorney James M. Miskell