Michalk, Beatty & Alcozer, L.P. Michalk, Beatty & Alcozer, L.P.
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Serving the state of Texas, Michalk, Beatty, & Alcozer provides
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A spendthrift trust can control the spending of heirs

You spent a significant part of your life working to earn money. Perhaps you saved and invested so that you would have a little something-or a lot of something-to leave to your children. Like many in Texas who have this dream, it may give you joy to think of your children and grandchildren benefiting from your hard work and sacrifices. You may be ready to create an estate plan that will allow them to reap those benefits.

However, taxes may not be the most critical threat to your goals. Too often, those who obtain a large amount of unexpected money make foolish decisions that may lead to financial disaster. They buy extravagant homes or allow unscrupulous people to talk them into fraudulent investments. They quit their jobs. For some, this means bankruptcy or worse. If it is your hope that your children will make some use of their inheritance, you may want to consider a spendthrift trust.

Protecting your family

If you can look at your heirs and see hints of financial trouble, leaving an outright inheritance may be a bad idea. Do you have a child who has an addiction, one who has made unwise financial decisions in the past, one who has acquaintances who seem to have too much control over his or her choices, or one who can't keep a job? A spendthrift trust can help you address these issues prudently.

As with any trust, the spendthrift trust owns the assets you fund to it, which can protect your children's inheritances if they should go through bankruptcy, divorce, lawsuits or collection actions from creditors. The trustee you name distributes the funds as you instruct. Your instructions can include specifics such as these:

  • How often the trustee disperses funds from the trust
  • How much each heir gets in a payment
  • What conditions the heirs must meet before receiving funds from the trust
  • How much control the trustee will have over the funds

Your trust instructions can include very specific rules. You may require your child to pass a drug test, hold a job for a certain time, earn a degree or complete other milestones before obtaining his or her inheritance. To create a trust that meets your goals, you can seek the advice and guidance of an attorney who can also counsel you on the best options for naming a reliable trustee.

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