Estate Planning Cincinnati: Five Types Of People You Should Protect With a Living Trust

by PJK When people die without a will, Ohio law dictates who will inherit from the deceased person’s estate. Without a will, these heirs stand to inherit outright both personal belongings and money.  Even with a will or revocable living trust, you can still cause problems for certain heirs by leaving money and assets to them directly in a lump sum.   The following five kinds of heirs are people you who probably should not inherit large sums of money outright and should be protected by using a revocable living trust:   Disabled spouses and children with special needs. Spouses who are disabled may, at some point, qualify for public benefits, such as Medicaid or Social Security Disability, as a result of their condition. There is a realistic probability that if these disabled spouses inherit money, their eligibility for public benefits could be jeopardized. Potentially, even a small inheritance could result in the spouse losing the public benefits. Similarly, as with disabled spouses, children with special needs may also be eligible for certain government benefits due to their condition. With these kinds of heirs, an inheritance may adversely affect their eligibility for certain financial assistance and benefits.  A properly crafted Special Needs Trust call allow you to provide for these heirs without jeopardizing their government benefits.   Minors and young adults. Minors cannot inherit from an estate until they are legal adults. Without proper trust planning underage beneficiaries’ inheritance will be paid to Guardian who is appointed by the Probate Court.  The worst part of this arrangement is that when the heir turns 18, the Guardian is required to pay all of the money to the 18-year-old heir, who even as a young adult is most likely not prepared to manage a large sum of money on their own.  A trust will allow you to dictate how and at what age your children or heirs will receive their inheritance.   Heirs with creditors. Certain kinds of people are known credit risks. These are people who have filed for bankruptcy before. These are people with poor credit ratings. These are people who may own financially adverse businesses like construction companies. Spendthrifts are heirs who have no business inheriting large sums of money outright due to the potential for the entire inheritance to be lost due to reckless spending. With proper trust planning, you can protect their inheritance from the claims of their creditors.   Heirs with dependency problems. People who are addicts and dependent on drugs or alcohol are generally not ideal candidates to inherit money outright. Potentially, an inheritance could be spent in a matter of weeks or days by some addicts.  With creative trust planning, you could require that an heir submit to periodic drug tests as a prerequisite to receiving their inheritance or a distribution from the trust.   Children with rocky marriages. If a testator’s adult children are in troubled marriages, a new inheritance might be incentive for the child’s spouse to consult a divorce lawyer and lay claim to the inheritance. Here, there is potential for the inheritance to be split with a child-heir’s ex-spouse.  By holding their inheritance in trust, their spouse, or ex-spouse, would have not claim against their inheritance. While these kinds of heirs may not be ideal candidates to inherit money outright, they should not be written out of an estate plan entirely. The best way to protect an inheritance for these heirs would be through a well-drafted trust centered estate plan.  A trust permits you to control the purse strings after your death by setting forth certain criteria for the heirs to inherit or receive money. If you have heirs that fall into one or more of these categories, you should meet with an experienced estate planning attorney who can help you address your specific concerns.   Paul Kellogg is an attorney in Cincinnati with the Phillips Law Firm, Inc. Paul’s practice focuses on providing comprehensive estate planning and probate services to families and business owners, as well as serving as outside general counsel to entrepreneurs and businesses where he provides guidance and advice on a wide variety of transactions and disputes.  He can be reached at (513) 985-2500 or via email at [email protected].   Please explore Paul’s other articles on estate planning and business on the Phillips Law Firm Blog page.    The article is for educational and informational purposes only and does not constitute legal advice. Anyone contemplating taking legal action is urged to obtain proper legal advice from an attorney licensed in your particular jurisdiction.   For an initial consultation contact us at (513) 985-2500 or email us at [email protected] or click Chat Now!® to get started immediately.