A REPORT for Britain’s House of Commons shows that Queen Elizabeth may be tugging on the purse strings just a little too strongly, demonstrating a bank balance that has dropped from £35 million to £1 million in just over a decade. Apparently, the Queen’s financial advisors have failed to properly control her finances.
Just about every family has one of these not-so-savvy-spenders, who often end up in vulnerable situations as a result of “failure to property control finances.” When strategizing your asset protection plan, it is very important to factor in these super-squanderer’s, in what we so conveniently call a “spendthrift trust.”
A Spendthrift Trust is set up to provide for your big-spender-beneficiary, but the beneficiary is prohibited from having in control over the distributions. Future claims against your not-so-frugal-friend will only be able to reach the distributions; thus, the trust must be structured so that the Trustee makes discretionary distributions. Mandatory distributions are not protected because any potential creditor can effectively obtain access to all of the funds. Furthermore, if the Trustee is also a beneficiary, creditors have the same rights to it as the beneficiary, because they can compel the beneficiary to distribute. However, if the beneficiary holds a power over trust distributions, subject to ascertainable standards (Health, Education, Maintenance, and Support; a/k/a “HEMS”), a claimant cannot force the distribution. Ultimately, it is very important to include the proper language in the trust, to ensure that your assets receive maximum protection. Please keep in mind, if you are fraudulently hiding money from creditors, you will lose that protection (ex: have notice of lawsuit and then make an irrevocable spendthrift trust).
If you have a super-spender-queen in your family, be sure to protect the royal crown! For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation.
It’s a Wild world. Are you protected?SM