Charitable Giving Attorney in Menlo Park, California
How do I protect a child’s gift?
How do I protect a child’s gift?
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well there’s one thing that I feel very
00:06
strongly about it’s that gifts and
00:08
inheritances should not be made outright
00:10
what do I mean by that I mean that most
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people will say well my child’s 25 or 30
00:16
they can just have it and that’s a
00:18
logical thing to say why why complicate
00:21
life with a trust for that child if the
00:23
child is able to handle things on their
00:25
own and the reason for that is trusts
00:28
are wonderful trusts can protect that
00:30
child so I tell the client instead of
00:33
giving the asset to the child at the age
00:35
of 25 or 30 have the trust continue but
00:39
let the child be their own trustee now
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that’s sounds illogical why does the
00:45
child need a trust if they’re their own
00:46
trustee and the answer is because if
00:49
they keep that trust going that trust
00:51
has creditor protection for the child
00:53
they don’t need a prenup for that trust
00:56
it’s better than a prenup they actually
00:58
don’t own the asset to be covered by a
01:00
prenup so if there is a divorce that
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Trust doesn’t come into the proceeding
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it’s not negotiated those assets are on
01:07
the table to be ordered back by the
01:09
judge any kind of creditor not just a
01:12
spouse in a divorce but if the child
01:14
kills someone in a car serves on a board
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or just gets in a any kind of litigation
01:20
at all and a judgment is entered against
01:22
that child the trust assets are
01:25
protected they can’t be seized now it’s
01:28
a very simple thing to do many times we
01:30
get questions my child wants to buy a
01:32
house how do I get them to help them buy
01:34
a house that very simple request well
01:38
parents give money or partly owned the
01:41
house that the best way to do that is in
01:43
a trust so that that asset is is
01:45
protected in many instances that trust
01:49
also has tax benefits that trust won’t
01:51
be taxed when the child dies as opposed
01:54
to the child owning it and being part of
01:55
the child’s estate but the main thing is
01:58
it keeps it separate it keeps it the
02:01
child’s property and it protects it from
02:03
creditors and when the child is their
02:06
own trustee if the child doesn’t like
02:08
the trust we draft them in such a
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flexible way does a child
02:12
just end the trust take everything out
02:14
and if they do that okay but at least we
02:17
tried we tried to protect it for them
02:20
another thing that’s interesting about
02:22
those trusts is when it’s created as a
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result of a death it’s a memory of the
02:27
person that created it those assets are
02:29
segregated they’re not thrown into a pot
02:32
with everything else and before the
02:34
child blasts through that money you hope
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they remember the source and so I always
02:40
say you know never make a gift unwrapped
02:42
wrap it in a trust or protect it
02:45
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Menlo Park, CA estates and probate lawyer Mary White shares some strategies for protecting a child’s gift.
