Welcome to the second half of our two-part series, inspired by the “Protecting Your Assets” podcast. In Part 1, we looked at how lifetime trusts can be used to protect your assets while you are alive. This time, we are focusing on what happens after you pass away. Because let’s face it, estate planning is not just about you. It is about taking care of your loved ones when you are no longer here.

 

If you are a longtime follower of our podcast or blog, you already know that our mission is to educate and empower families. We explain legal topics in a way that makes sense. If this is your first time diving into trust planning, feel free to start with one of our earlier episodes or attend one of our free educational workshops, either in person or online. We are here to help.

 

What Happens to an Asset Protection Trust When the Grantor Dies?

When a person sets up an asset protection trust during their lifetime, it is usually designed so that they remain in control while they are alive. Once that person passes away, the successor trustee takes over. This person becomes responsible for managing the trust and carrying out its instructions.

 

The successor trustee must notify creditors, settle any outstanding debts, file necessary tax returns, and begin distributing assets to the beneficiaries. This process does take time and effort, but one major benefit is that it can avoid probate completely. With the right planning, you can ensure a smooth transition for your family.

 

Trust Administration and Probate: What Sets Them Apart?

Many people assume that probate is unavoidable. That is not the case if you have a properly designed trust.

 

Here is the difference. Probate is a court-supervised legal process. It involves validating a will, paying off debts, and distributing assets. It is time-consuming, often expensive, and entirely public.

 

Trust administration, on the other hand, happens privately. The trustee follows the terms of the trust without having to go to court. Although there is still legal work involved, it is often simpler, more efficient, and far less stressful for the family.

 

What If the Trust Is Created After Death?

Sometimes, a trust is not created during a person’s life but is instead built into their will and established after they pass away. This is called a testamentary trust.

 

The key questions in this scenario are about what you want to protect and who you want to protect it for. Whether it is shielding assets from creditors, ensuring long-term care for a loved one, or controlling how and when the inheritance is used, the trust must be carefully crafted. Every word matters. That is why working with experienced estate planning professionals is so important.

 

Are Separate Share Trusts a Burden on Your Children?

Parents often ask whether they are making life harder for their children by using separate share trusts. In this setup, the inheritance stays in a trust for each child instead of being given to them outright.

 

We understand the concern, but the answer is usually no. Separate share trusts offer several key benefits. They can protect the inheritance from lawsuits, creditors, and divorcing spouses. They keep assets out of probate later on. And they still provide access and flexibility when designed thoughtfully.

 

You can even name your child as a co-trustee. That way, they are not just beneficiaries. They are involved in managing their share responsibly.

 

What Is a Spousal-Only Retirement Trust?

This is a tool that is used to protect retirement assets while still ensuring they go to a surviving spouse. It provides a way to add some protection to retirement accounts without locking everything down unnecessarily.

 

Whether or not this strategy is right for you depends on your goals. Some people prefer to name their spouse directly as the beneficiary. Others want to create a protective trust that still allows the spouse to benefit. There is no one-size-fits-all answer, so it is important to explore both options.

 

Why Name the Spouse as a Contingent Beneficiary?

In many estate plans, we see the spouse named as the contingent beneficiary on retirement accounts or life insurance policies. This provides flexibility. For example, if the primary beneficiary is no longer living, the spouse can step in and receive the assets.

 

This type of planning allows for a backup plan. It ensures that your hard-earned savings do not end up in the wrong hands or be lost in a lengthy court process.

 

What About Special Needs Trusts?

Families with a loved one who has a disability often have an extra layer of planning to consider. Leaving assets directly to someone who receives government benefits can cause those benefits to stop.

 

A special needs trust allows your loved one to receive an inheritance without affecting their eligibility for important programs like Medicaid or Supplemental Security Income. It is one of the most compassionate planning tools available, and it can make all the difference in someone’s quality of life.

 

Final Thoughts

Estate planning is not just about what happens to your money. It is about what happens to your people.

 

At Bellomo & Associates, we believe that no one should have to go through what our family went through. That is why we teach workshops, host a weekly podcast, and meet with families every day to guide them through this process.

 

If you want to learn more or get started with your planning, we invite you to join us.

 

Register for a free workshop: https://bellomoassociates.com/workshops/
Call us today: (717) 845-5390
Tune in every Saturday at 7:30 a.m. Eastern on WSBA: https://www.newstalkwsba.com/