Monetary gifts are often spent before the clock strikes midnight.
Little Rock, AR (PRWEB) December 17, 2013
Many parents and grandparents will write their children checks or hand out cash in Christmas cards this holiday season, but these purely monetary gifts are often spent before the clock strikes midnight on New Year’s. As an alternative, Hutchinson Financial, Inc. recommends that parents and grandparents use trusts to make estate gifts to their children this year, as these can last a lifetime and help to propel children into a financially secure future.
In estate plans, most consumers have a will or a living trust that details their wishes on how the estate will be distributed to heirs or beneficiaries after the estate owner’s death. Frequently, these documents are prepared with a child or another non-spouse beneficiary receiving a direct gift from the estate.
In this case, a direct gift is simply giving money or another valuable asset directly to a child or a non-spouse beneficiary. This type of direct gift is the same as handing the beneficiary a pile of cash for their birthday, or writing a check as a Christmas present – it is fully exposed to a number of risks.
A direct gift can be used as if it were cash – the recipient could spend all of it right away. Even if the recipient does choose to save the direct gift, they could eventually lose it for a variety of reasons. The money could be lost to creditors, it could be part of divided marital assets in the case of a divorce, or it could be subject to use as damages to be paid in the case of an accident.
To avoid these risks, Hutchinson Financial recommends that parents use trusts to make estate gifts to children. Choosing to use a trust as an estate gift provides several benefits for the recipient.
“The top three reasons you should consider using trusts to make estate gifts to your children are: asset protection, ease of administration, and potential estate tax savings,” stated Eric Hutchinson, founder of Hutchinson Financial.
Hutchinson discusses this topic further in an online video, “Top Three Reasons to Use Trusts to Make Estate Gifts to Children.” The educational video is part of Hutchinson Financial’s ongoing The Financial Briefing video series.
In the video, Hutchinson explains why he advises his clients to use trusts to make estate gifts.
“All that said, every estate planning situation is unique, so be sure to consult with your estate planning attorney for details on the use of trusts to make gifts to children or other non-spouse beneficiaries, and to make sure this is the right choice for you,” he says.
To learn more about how to begin investing and planning for the future, please visit the extensive library of learning tools and resources available at http://www.hutchinsonfinancialinc.com.
About Hutchinson Financial
Hutchinson Financial, founded in 1988, is an Independent Registered Investment Advisory firm based in Little Rock, Arkansas. Hutchinson Financial, Inc. is a fee-only financial planning firm committed to helping all clients reach their individual financial goals. All Hutchinson team members who provide financial planning services and investment advice to clients have professional credentials such as Certified Financial Planner, Chartered Retirement Planning Counselor, Chartered Financial Consultant, Chartered Life Underwriter, or Accredited Investment Fiduciary. To learn more about Hutchinson Financial, Inc., please visit http://www.hutchinsonfinancialinc.com.