SAFE Trusts

To protect a loved one, putting assets in a trust can prevent them from mismanaging an inheritance, becoming vulnerable to financial risks like creditors and divorce, or losing vital government benefits.

What is a SAFE Trust?

SAFE TRUSTS stands for Safeguard Assets for your Family Exclusively.

A SAFE TRUST is a type of Living Trust. It can be revocable or irrevocable depending on your objectives. Assets can be placed into the SAFE TRUST while you are alive or under your WILL or from a Living Trust upon your demise. The assets in the Trust will be managed by your trustee(s) for the benefit of your loved one.

In 2007, I, along with a small group of experienced estate planners, developed the SAFE TRUST concept. For a comprehensive discussion on the use of SAFE TRUSTS, I can recommend Why Wills Won’t Work (If You Want to Protect Your Assets) by Armond Budish.

What does a SAFE Trust do for me and my loved ones?

The SAFE TRUST can address concerns you may have for your loved ones, such as a spouse, children or grandchildren.

In the past, trusts were primarily used by the wealthy, but over time, they have become a primary planning technique for many families. You’ve worked hard to accumulate your assets and sacrificed to ensure you can pass them on to your family.

Instead of leaving assets outright, a SAFE TRUST allows you to:

• Protect assets from bad happenings such as a bad marriage, creditor claims, poor asset management, or estate taxes.
• Ensure your assets are available to your loved ones but protected.
• Control who benefits from your assets.

The SAFE TRUST can be your gift of an ongoing legacy for your loved ones.

Who should have a SAFE Trust?

If you have any of the following concerns, a SAFE TRUST may be the answer:

• Are you worried about your child’s marriage and the possibility of assets being part of a divorce proceeding?
• Does your child have creditor problems or difficulty managing finances?
• Do you have a family member with special needs who will need help managing assets?
• Do you want to ensure your grandchildren benefit from your assets, such as paying for college?

If any of these resonate with you, a SAFE TRUST can provide the protection and peace of mind you’re looking for.

What are some key indicators for when a SAFE Trust is needed?

Over 20 concerns have been identified that can be addressed with a SAFE Trust.

1. Divorce concerns for a client or child.
2. Death of a client’s spouse or child’s spouse.
3. Issues with child or child’s spouse (e.g., drugs, gambling, or financial problems).
4. Spendthrift tendencies in child or child’s spouse.
5. Health problems in child or child’s spouse.
6. Financial instability or prior bankruptcy.
7. Child is remarried with stepchildren.
8. Significant assets intended for grandchildren.
9. Significant retirement funds to protect.
10. Desire to keep real estate intact for heirs.”

Are There Different Types of SAFE Trusts?

Yes, there are. One size does not fill all. Here are the different types of SAFE Trusts:

• Standard SAFE Trust: Protects inheritance from divorce, creditors, and lawsuits.
• Dynasty SAFE Trust: Extends benefits for multiple generations.
• Gifting SAFE Trust: Provides protection for lifetime gifts.
• Death Tax Protection SAFE Trust: Shields inheritance from estate taxes.
• Retirement Fund SAFE Trust: Extends income tax deferral for retirement funds while providing standard protection.
• Managed SAFE Trust: Offers financial management for young or immature beneficiaries.
• Special Needs Trust: Protects assets for a family member with special needs while maintaining public benefits.

If you would like to speak with an experienced elder law attorney regarding your situation or have questions about something you have read, please do not hesitate to contact our office at 1 (800) 680-1717. We look forward to the opportunity to work with you.

Disclaimer: The information provided above is for general informational purposes only and is not legal advice.