Tag: money

What Is a Spendthrift Trust in Illinois?

Posted May 23, 2022 by Law Office of Andrew Szocka

If you have a relative who is bad with money but needs support, you may want to form a spendthrift trust. Many people have someone close to them who cannot manage their own money. A relative may have a gambling problem, have a mental impairment, have a lot of debt, or just need help handling finances. You might be surprised to learn that estate planning could allow you to provide for and protect a family member who is like this.

The Perils of Supporting a Family Member Who Is Bad with Money

You may think that giving money outright to a relative is the best option, even if he or she is bad with money. Or you might want to put money in an ordinary trust for the relative’s benefit. Neither of these methods are usually your best option for a few reasons:

  • Your relative may spend all the money right away
  • Creditors could access the money (even if in a trust) to satisfy debts
  • You may owe gift taxes depending on the size of your gift
  • You lose any control over how the relative spends the money

Instead, consider starting a spendthrift trust to both provide for and protect your relative.

What Is a Spendthrift Trust?

A spendthrift trust is a special type of trust that give the trustee full authority to decide how to spend trust distributions for the beneficiary’s benefit. The trust’s language explains how often the trustee needs to make distributions and may specify the amount to be spent. In addition, the trust language must include a special “spendthrift clause” explaining the settlor’s intent that the trust be a spendthrift one.

Because the beneficiary of a spendthrift trust has no authority to spend or receive trust distributions as he wishes, most creditors cannot access those distributions to satisfy debts. The typical exceptions are debts like child support, alimony, and payment for “necessaries” like food and shelter.

It is very important that your spendthrift trust include the necessary language and have an appropriate trustee. If the trust is not set up right, creditors could go after the distributions and your trust would not have the effect you expected. Talk to a lawyer about how to set up a spendthrift trust to benefit a relative.

Want to create a spendthrift trust or another type of trust? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

High Net Worth? Why You Need an Estate Plan Now

Posted May 18, 2022 by Law Office of Andrew Szocka

If you have a high net worth, you probably need to make an estate plan as soon as possible. You should have an estate plan to protect yourself, gain peace of mind, and effectively pass on assets to your heirs.

Protect Yourself with an Estate Plan

When you have a high net worth, you may have relatives or friends who want your money. It’s hard to think about the possibility that someone could try to take your assets away from you, but you need to protect yourself. An estate plan can not only help you distribute all of your assets, but also help you gain better control of them.

For example, you can make a plan that gives to charity over time or after your death, with the benefits of gaining tax advantages and reducing your probate estate. Further, you could create a trust that leaves interest and dividends to your relatives but limits their ability to access the principal.

Gain Peace of Mind with an Estate Plan

Without an estate plan, your assets would pass to close relatives through a process called intestate succession. You do not get to choose who inherits, and you do not get to choose how much each person inherits. Your substantial estate will have to go through the probate court process for distribution, which can take months or years and cost a lot of money.

Having an estate plan in place allows you to focus on the rest of your life. You have assurances that your assets will be distributed as you wish. Also, you can appoint a trusted agent to make medical and/or financial decisions for you if you cannot.

Pass on Assets to Your Heirs with an Estate Plan

Finally, you can pass on your high net worth to your chosen heirs with an estate plan. If you have children or a spouse, you can protect them and provide for their future needs through structures such as trusts or college savings plans. You can give money to other relatives or friends too. All of these gifts can take place during your lifetime or after you pass away. In short, an estate plan gives your high net worth purpose in the future after you pass away.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.