Asset Protection: Why Outright Distribution is Almost Always a Bad Idea

When you leave behind a large inheritance, you may think it is setting up your beneficiaries for life. However, the facts suggest that a large sum of money may not last as long as you would think. 70% of lottery winners, whether it be $1 million or $100 million, end up either losing or spending all of their winnings within five years, and one third of these winners end up declaring bankruptcy. While you may think your beneficiaries can handle the money, you never really know unless it happens. By creating a trust through proper estate planning, you can easily avoid these pitfalls.

Let’s say you have complete confidence that your beneficiary can handle their inheritance outright. But what happens when 3rd parties try to attach themselves to their inheritance? Your beneficiary’s spouse may end up taking or forcing the inheritance to be spent in a divorce. Creditors, fortune hunters and scammers may attempt to access the inheritance through your beneficiary. With their newfound wealth, your beneficiary may become the target of lawsuits, frivolous or otherwise. Even if you avoid all these, without a proper estate plan, you may end up losing much more of the inheritance than you have to in federal taxes.

A trust may be sufficient for ensuring your beneficiary does not blow through their entire inheritance, but may not provide sufficient protection from creditors. But through over 20 years of experience, Michelle can provide this protection through the Personal Asset TrustSM, which allows essentially the same control to the beneficiary but with the flexibility to provide as much or as little asset protection as needed to ensure the inheritance you are leaving to your beneficiary actually ends up in their hands.

Experience & Affiliations

California State BarCalifornia State Bar
California Real EstateCalifornia Department of Real Estate
Shearman and Sterling LawShearman & Sterling
Law Society of CanadaLaw Society of Canada
Law Society of EnglandLaw Society of England

Legal Industry:

• Attorney, Member of the State Bar of California

• Solicitor in England and Wales

• Solicitor and Barrister in Ontario, Canada

Real Estate Industry:

• Licensed Broker #01841337, California Department of Real Estate