“Inheritor’s Trusts”

The presumptuousness of children is being taken to a new level by the increasing popularity of inheritor’s trusts.

This estate planning technique works as follows.  A person who hopes to be the beneficiary of a will, typically a child who anticipates being named in his or her parent’s will, establishes a trust containing the dispositive and administrative provisions the child determines are in that child’s best interest.  Often, these provisions help protect trust property from the person’s creditors, potential ex-spouses, and wealth transfer taxes.

The person then goes to his parents, grandparents, other relatives, and friends and importunes them to “leave your property to this trust that I have established for my benefit.”

In this manner, the windfall upon the testator/rix’s death is governed by the terms of a trust the beneficiary wants, not the restrictions and limitations which the decedent may have preferred.

Definitely a “me generation” estate planning technique, eh??

See Rachel Emma Silverman, How to Ask (Nicely) For Your Inheritance, W.S.J., May 11, 2005, at D1.

Special thanks to Jeffrey Walsh for bringing this article to my attention.