Children’s Protective Trusts

Some beneficiaries work in professions that expose them to higher risks of professional liability suits than the general population. An additional ‘gift’ which a parent can leave for a child is to place the child’s inheritance in a creditor protective trust so that in the event financial tragedy befalls the child, his or her inheritance is protected within the trust and can provide a safety net for the child, and if desired, such child’s family.

Similar to the above creditor protective trust are more restrictive trusts which can be used to manage the inheritance of an unstable beneficiary who has life skills problems; is easily manipulated or influenced by others; has substance abuse problems; or who is just generally ‘bad’ with money. Depending upon the circumstances, a variety of protective trusts can be created for the benefit for such child, which will provide him or her use and enjoyment of the inheritance, but not its control. These trusts can continue until certain ages of maturity are reached, or for life if necessary, and can protect the assets from the claims of creditors. If you are concerned about a particular person’s ability to manage his or her inheritance, you should discuss the various options available with your attorney, as each situation in unique.

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