Employer Fundamentals: Understanding Employment Law
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Employer Fundamentals: Understanding Employment Law

As a business owner, keeping informed about the finer points of employment law is important. If you're getting ready to hire your first employees, you need to be sure that you understand exactly what you can and cannot do. Don't risk getting yourself into legal trouble by asking the wrong question at the interview or making an off-hand comment that's considered legally unacceptable. I created this site to give you the basics of employment law expectations. I hope that the information here helps you to understand what you should and shouldn't do as you're interviewing and hiring your first staff members.

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Employer Fundamentals: Understanding Employment Law

Which Trust Can You Use To Protect A Financially Irresponsible Beneficiary?

Irene Robertson

If you concerned that a beneficiary will squander his or her inheritance, you can take action while estate planning to prevent this. There are two types of trust that are specifically designed to ensure that your beneficiary does not misuse his or her inheritance. To help ensure you select the trust that meets your needs, it is important to know the key aspects of each.

Sprinkling Trust

A sprinkling trust gives the trustee the power to determine how and when funds are distributed to the beneficiary. In most instances, the trustee issues funds based on the needs of the beneficiary. For instance, if the beneficiary needs $1,000 to pay for a medical procedure, the trustee could issue that amount to him or her.   

A sprinkling trust is not just good for beneficiaries that are financially irresponsible. It can also be useful in ensuring that the needs of your beneficiaries are met. For instance, the trustee could be instructed to distribute funds based on varying needs, such as paying for college tuition or buying a home.

The trust can have multiple beneficiaries. Instead of designating a certain sum of money to be distributed to each beneficiary, you could set up a trust with a pooled amount. Each beneficiary would then receive funds, as needed, from the pooled funds. It is important to note that when this is done, it is very likely that some beneficiaries might receive more in distributions than the others.

Spendthrift Trust

A spendthrift trust is different than the sprinkling trust because payments from it are made based on the stipulations outlined by you during the setup of the trust. Since you are concerned that your beneficiary will squander his or her inheritance, you can give the power to the trustee not to distribute funds if he or she feels that it will be wasted. Otherwise, the funds are distributed as you choose.

A spendthrift trust is ideal if you also want to protect your beneficiary from creditors. Any funds that are in the trust cannot be touched by his or her creditors because they legally belong to the trust. You can authorize the trustee to purchase goods and services with the funds from the trust for even more protection from the creditors.

Consult with an estate planning attorney, such as Edward G. Foster, to determine whether a sprinkling or spendthrift trust would be best for your estate. Your attorney can help you evaluate the trusts and your state's laws to ensure that the decisions you make are legally sound.


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