No one is perfect, so you may need provisions in place to protect your assets from your children. Ensuring that an estate is administered in a successful, profitable way calls for a clear plan. Estate administration and probate in California are necessary if you don’t have asset protection or spendthrift trust. Just don’t fall into the costly misconception of assuming that the two are the same. One protects against spendthrift heirs while the other addresses public interest.
The spendthrift provision
With templated language, the trust provisions an attorney writes to hedge spending are flexible. You can state that beneficiaries have no right to use a trust’s money beyond what a trustee grants. This is only one way to ensure that a spendthrift heir doesn’t waste money. To avoid estate administration and probate in a public court, consider these other provisions.
• The beneficiary has no control of the trust’s principal fund.
• A beneficiary can only receive a specified portion of a trust’s investment profits.
• The beneficiary must prove him or herself financially worthy.
• The beneficiary is banned from using the trust for bankruptcy.
Your revocable or irrevocable status
Being revocable means that a trust is changeable, withdrawable and entirely revocable. Irrevocable trusts, however, are stricter, being more binding in nature. The type of trust you decide on can always have spendthrift provisions, but irrevocable trusts are the most secure. Since they’re strictly mandated, they’re less exposed to creditors or poor decisions.
Estate administration and probate in California
In California, you can achieve similar effects of a spendthrift trust by using an asset protection trust. An asset protection trust simply uses different clauses to hedge a beneficiary’s inheritance from creditors, spending or divorce. These hedges are achieved by the trust relying on an irrevocable status and a reliable trustee.