Monthly Update for Administration of Trusts and Asset Management

May, 2025



 

SPRING IS HERE!

It is hard to believe May is already here…February, March and April disappeared! It didn’t help having the adenovirus for 10 days and then Influenza A for 10+ days and then that lead to a lot of “catch up” time. Recovering from all of that just in time to see the market volatility begin as a result of the tariff showdowns. 

 


PROTECTTING YOUR CHILDREN'S AND GRANDCHILDREN'S INHERITANCE

This month we will discuss the value of trusts and how they can protect your children’s and grandchildren’s inheritance. The majority of people know that use of a trust for their estate planning can, among other things, avoid probate proceedings upon their death, maintain privacy and confidentiality because probate proceedings are public records, make the transition of the assets from the decedent to the decedent’s heirs quick and efficient, and for those who have large estates, can reduce or eliminate estate taxes. However, many times those creating trusts do not know or consider options regarding how they can protect their children’s and grandchildren’s inheritances. Here are some basic concepts on how the use of trusts can protect the inheritances of family members, future generations and other beneficiaries.


USE OF SUB-TRUSTS

Generally speaking, your typical revocable trust does not protect the assets of the person(s) who create the trust from that person(s)’ creditors. However, a parent, or anyone, can protect the trust assets for the benefit of the beneficiaries who inherit after the death(s) of the person(s) who created the trust. An easy way to remember it is, typically, a revocable trust does not protect the assets of the person(s) who signs the trust, but it can protect the beneficiaries who did not sign the trust. The person(s) creating (signing) the trust (typically called a Grantor or Settlor) can include sub-trusts that are inside the primary trust. Those sub-trusts can be for the benefit of anyone, such as a child, grandchild, etc. For example, the trust could provide that upon the death of the Grantor, the assets remain in trust for the benefit of the Grantor’s children. The sub-trusts can also continue so that the assets remaining in trust upon the death of a child of the Grantor continue to be held in trust for the benefit of the children of the deceased child (your grandchildren). 

BENEFITS OF A SUB-TRUST
 

The primary benefit of a sub-trust is to protect the inheritance of your child(ren) and grandchildren in the event one of your children or grandchildren become involved in a divorce proceeding. The sub-trust can also protect your beneficiaries from judgment creditors and bankruptcy trustees who are trying to take their inheritance away from them.  

TRUSTEES

Frequently, the Grantor of a trust will want an adult child to be the trustee of his or her own sub-trust. Oklahoma law is unique in this regard and permits the beneficiary to also be his or her own trustee. However, sometimes it is not a good idea to have an adult child be the sole trustee of his or her sub-trust. For example, an adult child may be in a volatile marriage, or is known by you to have an addiction to gambling, drugs, alcohol, or simply someone who would be wasteful and spend the inheritance foolishly or would be easily influenced. In those instances, the Grantor of the trust may wish to consider appointing a trust company or a “professional trustee” to be the trustee for the benefit of the beneficiary for whom the Grantor has concerns.

CONSIDERATIONS

The use of trusts allows you to maintain control over the disposition of your assets while providing for your beneficiaries. 

We are here to help answer any questions these topics might have generated. 

In our next Monthly Update, we will discuss how a Grantor can protect his or her assets by the use of a unique trust, as well as the pros and cons of such trust.

WealthTrust Oklahoma is the Oklahoma Trust representative office of National Advisors Trust Company. We are independent and hold a federal charter.  In addition to trust administration services, we offer investment management services through our firm, WTO Advisors.

Alyssa Kaiser, CTFA, has over 31 years of experience in the trust, investment, and banking industries and is President of WealthTrust Oklahoma and WTO Advisors.  Alyssa may be contacted at: (405) 241-1600, or by email at Alyssa@WealthTrustOk.com.