In her article in the Wall Street Journal, Jennifer Hoyt Cummings gives tips regarding setting up a trust so that parents can protect their assets from free-spending or other problem children/ beneficiaries. She advises that a trust should be put in place so that a spendthrift child cannot get title to a home. A trustee can buy real estate on behalf of the child.
She also advises setting up the trust so that the child’s creditors cannot access the inheritance. This is commonly referred to as an asset protection trust.
Ms. Cummings cautions that a trust could go on for a hundred years or more, so language should not be too specific or too narrow. In addition, legal jargon in the trust and the reasons for the trust provisions should be explained with a letter attached to the trust.
And she suggests considering trust distributions for children who want to take on special projects like studying abroad.
Consult your estate planning attorney for more information.