Want to provide income to your grandkids or worried your child’s partner will walk off with part of your estate? This is what to do.
More than half the wills being prepared by parents are attempting to exclude their children’s spouses or partners from being eligible for a share of their estate if they separate, say family law specialists.
There might be cheaper alternatives, such as binding agreements, that provide protection and lower the risk of expensive legal challenges by an aggrieved party.But those considering using trusts to defend their assets must decide whether their estate justifies the initial and ongoing administration and costs.
It is possible for a will to have more than one testamentary trust. Separate trusts for each child of a family provides tax planning options in addition to protecting part of an estate from a beneficiary with mental, drug or alcohol problems. For example, a beneficiary on a higher tax rate receiving an annual distribution of $40,000 from assets they inherited under a will without the tax options of a testamentary trust would pay $18,800 tax.
“The Family Court will look straight through strategies intended to thwart its intention to look after both parties,” says Balalovski.Courts will review the trust structure and look at the parties who hold key positions of control – such as the trustee or appointer .
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