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Las Vegas Office: 702.254.4455
Henderson Office: 702.433.4455
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Dangers of Outright Distributions

by: 
Law Firm of Jeffrey Burr

Many clients feel that once their children or grandchildren reach a certain age, they will have obtained a financial maturity that will enable those beneficiaries to make good financial decisions and not spend their inheritance in one visit to a casino.

 

Thus, in many estate plans beneficiaries are entitled to receive their inheritance all at once when they reach a certain age, or to receive portions at certain ages. While a beneficiary at age 25 or 30 may very well be financially mature, there are dangers besides a beneficiary’s propensity to spend money to consider when crafting an estate plan.

When a beneficiary is entitled to an outright distribution, those assets may become subject to more than a beneficiary’s spending habits; a judgment creditor can seize an inheritance to satisfy a claim, a bankruptcy court can seize an inheritance to pay creditors and costs of the bankruptcy proceeding, a divorce court may award some or all of an inheritance to that beneficiary’s soon-to-be ex-spouse, or if the beneficiary fails to create his or her own estate plan and something happens to him or her, the inheritance may become subject to a probate.  If a minor is the beneficiary of an outright distribution, they will receive a check when they are 18, with no limitations in place for how they can spend it.

 

To avoid those potential dangers, among others, you can direct through your estate plan documents that a beneficiary’s inheritance be held in trust for their benefit,with distributions to be made in the discretion of the trustee.  By making distributionsto a beneficiary discretionary rather than mandatory, the inheritance is protectedbecause the money is not in the beneficiary’s pocket to spend or give away.  Allowing the inheritance to stay in trust will also allow the assets to grow, enabling your beneficiary to receive more than what they were originallyentitled to over time.

At JEFFREY BURR, LTD. our attorneys have worked with many clients and their families to determine the best estate plan for the preservation of their legacies and protection of their beneficiaries.  To discuss the best estate plan for your family, contact us today.

 

Las Vegas Office
10000 W. Charleston Blvd., Suite 100
Las Vegas, NV 89135
Phone: 702.254.4455
Fax: 702.254.3330
Henderson Office
2600 Paseo Verde Parkway, Suite 200
Henderson, NV 89074
Phone: 702.433.4455
Fax: 702.451.1853
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