Monthly Update for Administration of Trusts and Asset Management.

Kelli Bass |

It is our hope that our Monthly Update will be helpful for you to better understand the administration of trusts and asset management from a Trustee and Investment Advisor’s viewpoint.

LAST MONTH

Last month I discussed options parents have to provide “incentives” to their children, striving to instill positive values and a good work ethic while, hopefully, avoiding an adult child from developing a mindset of being a “trust fund baby” who does not need to financially support themselves. This newsletter mentions a few other options parents may wish to consider regarding strategies that are available for protecting their adult children and their families.

CONSIDERATION FOR YOUNG ADULT BENEFICIARIES

Many times parents are focused upon avoiding probate, avoiding potential guardianship proceedings and minimizing estate taxes.  Sometimes parents do not take into consideration the “what ifs” with respect to their young adult children who will be inheriting from the parents.  

Regrettably, sometimes parents’ good intentions to benefit their children backfire on them when it could have been avoided.

SOME SPECIAL CONSIDERATIONS

Parents should take into consideration the possibility of events that their young adult children may not be able to completely control.  Some of those considerations for young beneficiaries include potential “what ifs”, such as:

  • Creditor issues.
  • An unstable marriage.
  • Undue influence, such as from a strong-willed spouse or close friend.
  • Naivety in making investment decisions, and might be subject to investing in risky investments or scams.
  • Commingling their inheritance with marital assets, thus placing their inherited assets at risk should a divorce occur.
  • Prone to quickly spending all money they ever receive and/or are living above their means.

POSSIBLE SOLUTION

One possible solution to avoid young adult beneficiaries from wasting or “losing” their inheritance is to retain the assets in trust after the parent’s death(s) for a certain period of time.  

Keeping the assets in trust can help ensure that the inherited assets:

  • Will not be wasted frivolously.
  • Will not be treated as a marital asset in a divorce proceeding.
  • Will not be subject to creditor claims, garnishments, etc.
  • Will not be lost in risky investments or scams.

RETAINING ASSETS IN TRUST WILL BENEFIT YOUNG BENEFICIARIES

Keeping the assets in trust after the parent’s death(s) will help ensure that the assets:

  • Provide a steady and reliable income stream.
  • Be available for your children in later years when your children are not as susceptible to “losing” the inherited assets.
  • Are available to help maintain a certain standard of living, regardless of whether the adult child has creditor problems.
  • Can be available to benefit the next generation of family members.

RECOMMENDATION

As a courtesy to those with trusts, and while we do not offer legal advice, at no cost or obligation to you, we would be happy to review your trust with you to give you a trustee’s perspective of different options you may have to benefit your children over an extended period of time.  

WealthTrust Oklahoma is the Oklahoma Trust representative office of National Advisors Trust Company. We are independent and hold a federal charter.  In addition to trust administration services, we offer investment management services through our firm, WTO Advisors.

Alyssa Kaiser, CTFA, has over 30 years of experience in the trust, investment and banking industries and is President of WealthTrust Oklahoma and WTO Advisors.  Alyssa may be contacted at: (405) 241-1600 (office), or by email at Alyssa@WealthTrustOk.com.