Many people in Will County and Kankakee County want to leave their fortunes to their loved ones despite their faults.
Realistically, though, they may be worried that a loved one may receive an inheritance only to have it taken by their creditors.
In other cases, the loved one’s own personal struggles with addiction or irresponsibility may make a person worried that passing along a legacy will be for naught. It is a perfectly reasonable thing to think about this concern during estate planning.
Spendthrift trusts can help Illinois families pass down and protect wealth
One possible solution to this problem is for an Illinois family to consider a spendthrift trust.
Generally speaking, all trusts limit when a family member will actually receive her share of a loved one’s property. She may be entitled to income from the trust from time to time, but she will not receive a share of the property itself in the short term.
Still, the beneficiary has what is called an equitable interest in the trust because she will eventually get the property.
At its core, a spendthrift trust prevents a person from giving away his equitable interest in the trust, or his right to receive income, to a creditor or some other person.
This and other so-called spendthrift provisions in a trust can protect a person’s inheritance from traditional creditors as well as the possibility of losing an inheritance in a divorce. It also makes it more difficult for the person to irresponsibly spend money from the trust.
Spendthrift trusts must be set up carefully in order to be effective. Moreover, in some circumstances, laws may limit the effectiveness of spendthrift trusts, and in other cases, the option may not be the best for a family.