A family may protect their assets through a bloodline trust. This protects your family from others who may attempt to claim title to your assets. In this article, we break down what a bloodline trust is, and how it can benefit your family.
What actually is a descendant’s trust?
Death is inevitable. When someone dies, a will is usually used to distribute their assets. However, another option is the establishment of a bloodline trust. This trust ensures that your assets may only be passed to direct bloodline. The beneficiary in this trust doesn’t receive the assets outright, rather, the trust holds their entitlement. A spouse or friend is unable to access any asset held in the trust. This is because they are not an immediate descendant of the decedent. This protects your family, and their assets.
Why would I need a descendant’s trust?
In today’s society, it is a fact that over 50% of marriages end in divorce. When this happens, under equitable distribution, both parties generally receive half of the overall assets. A bloodline trust ensures that your son/daughter-in-law is unable to access any asset held in the trust. Furthermore, it is important to consider a bloodline trust if your son/daughter-in-law has any of the following characteristics:
- Excessive spending.
- Poor money management skills.
- Difficulty holding a job.
- Gambling habits.
- Addictions.
- Children from previous marriages.
The trust will protect your assets from any of these factors. The in-law will be unable to access the assets, ensuring your child is secure financially.
What are the major benefits?
As discussed, bloodline trusts are designed to keep your assets within your family. This creates several benefits, including:
- Children and grandchildren are the only ones who may use the trust assets.
- The assets are never available to your son/daughter-in-law, either in marriage or in divorce proceedings.
- Creditors are unable to access the assets.
- Upon your child’s death, your child’s bloodline receives the remaining balance.
Who becomes the trustee?
Your child can be appointed the initial trustee of a bloodline trust. If your child is sued or is divorcing, they are automatically removed as a trustee to protect the assets. The successor trustee may be another child or a financial institution. Once the divorce is finalized, or the legal issues are resolved/terminated, the child is reinstated as the trustee.
If you do not consider your child completely reliable, you may consider appointed an independent trustee or another family member as co-trustee.
Final thoughts
A bloodline trust is a safety net for your family, particularly if you have significant assets. In short, it ensures that the assets held in the trust are unable to be accessed by others, protecting your children in the event of lawsuits or divorce. If you have further questions or wish to establish a bloodline trust, an estate planning lawyer may assist in your inquiries.
