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David P. McCabe,
WMCP®, ChFC®, CLU®
Financial Planner
Nathaniel D. High, RICP®
Financial Planner
Nicholas J. Over, CFP®
Financial Planner
Sara E. Martin
Client Relations Manager
Jennifer A. McCabe
Client Relations Specialist
jennifer.mccabe@prudential.com
Centuria Financial Group
2333 Baltimore Blvd Suite B
Finksburg, MD 21048
Phone: 443-952-7232
November/December 2023
Shield Your Assets with a Spendthrift Trust
Many high net worth families try to pass as much of their wealth as possible to loved ones, but they may worry how those assets are used. Certain trusts can help your estate distribute assets in a way that meets everyone's needs while helping to ensure the assets your heirs inherit aren't squandered.
One such trust is a spendthrift trust. If you wonder whether your child will be mature enough to handle a significant inheritance at an early age, you might want to explore this trust.
Gradual Release
If you will pass your assets to a loved one through a trust, a spendthrift provision won’t prevent that person from receiving an eventual inheritance. Rather, this provision can delay receipt of assets until certain conditions are met. For example, the trust may require that the beneficiary receive a college degree before receiving assets. Or, assets may be released to the beneficiary over time with the hope that maturity comes with age or experience.The trust can include any or all of the following conditions for the distribution of assets:
- The release of funds can occur on whatever schedule you like: weekly, monthly or annually;
- The beneficiary may qualify for faster release of the funds based upon not only achieving certain education, but marrying or becoming a parent;
- Payment for desired actions, such as tuition, or emergency funds, such as for medical bills.
An important aside: If the trust is irrevocable, you may be able to shield trust assets from creditors. This isn’t a minor issue if you have a child who, as the trust states, is a spendthrift and runs up high credit card and installment credit bills.
Next Steps
Because a spendthrift trust can create hard feelings, discuss with loved ones why you believe one is necessary and how they can receive assets when needed.Choose a trustee who you can depend on, one who will follow the trust’s terms to their fullest. Also, consult your financial professional, who may recommend appropriate measures to protect your assets and make them last.
Finally, don’t forget to talk to your financial professional, estate planning attorney and tax professional to make sure the spendthrift trust achieves exactly what you want. After all, a properly drafted trust that addresses your wishes and considers the big picture is the goal.
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Centuria Financial Group is not affiliated with Prudential Financial. Centuria Financial Group sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Centuria Financial Group is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Centuria Financial Group and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Sara E. Martin and Jennifer McCabe are employed by David McCabe and not The Prudential Insurance Company of America or its subsidiaries.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
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