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Encino Trust Lawyers

Helping Families Protect Their Inheritance

A Heritage Trust (HT) can protect your family’s inheritance from creditors, spouses, and future estate taxes. In a typical estate plan, you will leave a portion of your estate to your child with him or her receiving the assets either at the time of your death or at a future date, which is typically related to the child’s age. For example, your child may receive his or her inheritance in portions, at ages 30, 35, and 40.

If you are looking for an alternative method for distributing your assets to your children’s benefit that provides more advantages than the traditional distributions to beneficiaries, then you may want to consider setting up a heritage trust. At Tisser & Standing, we bring with us nearly 50 years of experience to help you properly establish a heritage trust. We have helped countless individuals and families throughout the San Fernando Valley and Los Angeles, and we stand ready to do the same for you.

Call us at (818) 528-5553 to get started. Our Encino heritage trusts attorneys work closely with clients in helping them achieve specific needs and goals.

How a Heritage Trust Works

In a Heritage Trust, assets are placed in a trust for your child to be used throughout his or her lifetime. Your child can be the trustee of the trust and handle all of the trust’s administration with one exception: there is a Distribution Trustee who is responsible for distributions from the trust to him or her. The distribution trustee has sole authority when or how your child can receive the assets. The purpose of the Distribution Trustee is to provide asset protection to him or her. Your child, however, will have the right to remove and replace the Distribution Trustee at any time, provided that the replacement is not, in general, a person related to him or her.

At your child’s death, the assets remaining in the trust will then continue to be held in trust for his or her children. If your child has not reached the ages at which you want him or her to be in control of the assets, you would name a trustee, usually the same person as the trustee in your family trust, to be in control of the assets until your child reaches the designated ages to take over his or her Heritage Trust.

Benefits of a Heritage Trust

There are three primary benefits of establishing a Heritage Trust for your child including:

  • At the child’s death, the assets should pass to his or her descendants without being subject to death taxes. For example, if the assets put in the Heritage Trust for your child are worth $500,000 when you die and $4,000,000 when your child dies, the entire $4,000,000 can pass estate tax-free to your grandchildren. This makes the Heritage Trust a Generation-Skipping Tax Trust.
  • Assets in the Heritage Trust should not be subject to your child’s creditors. In California, a person cannot, in general, gain protection from creditors by creating this type of trust and putting their own assets into it. By establishing a Heritage Trust for a child, you can provide your beneficiaries with significant asset protection they would not otherwise have.
  • A Heritage Trust can help protect a child’s inheritance from his or her spouse. If a child has a Heritage Trust that owns the assets inherited from you, he or she will not be able to commingle them with community funds since they are kept separate in the Heritage Trust. This ensures that a portion of the assets would not be treated as community property and divided between the spouses upon a divorce.

To set-up a heritage trust for your child today, contact Tisser & Standing at (818) 528-5553. Our Encino heritage trusts attorneys can guide you through the entire process and ensure proper trust administration.

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