As a life and legacy planning attorney, I know that most parents want to leave something meaningful behind for their children. For many, the inheritance you pass on represents years of hard work, sacrifice, and love. But here’s the truth most families don’t realize: without the right protections in place, your child’s inheritance can disappear in an instant.
That’s where a Lifetime Asset Protection Trust (LAPT) comes in. An LAPT doesn’t just transfer money or property – it creates a layer of lifelong protection around your child’s inheritance, shielding it from divorce, lawsuits, creditors, and even your child’s own mistakes.
Let me share a real-life example that shows why this kind of planning matters.
The Flooded Penthouse
Eric was staying at a friend’s penthouse apartment in New York City. He ran a bath, left the water running, and went out with another friend. Hours later, he came home to find disaster – the bath had overflowed and caused over $400,000 in damage to the penthouse and the unit below.
While insurance covered the repairs, the insurance company turned around and sued Eric for reimbursement. Since the accident was caused by his negligence, Eric was personally responsible for the damages.
Now imagine Eric had just received an inheritance. If that inheritance was left to him outright, he could have lost hundreds of thousands of dollars to this one mistake. But if his inheritance had been held in a Lifetime Asset Protection Trust, those funds would have been untouchable – completely shielded from the lawsuit.
Why Most Trusts Aren’t Enough
Many families are advised to leave assets to their children in a trust. That’s smart – but the way most trusts are set up still leaves inheritances vulnerable.
A common approach is to release funds outright at certain ages (for example, one-third at 25, half at 35, and the rest at 40). On paper, this seems reasonable. But once assets are distributed, they lose all protection. At that point, a divorce, lawsuit, medical crisis, or financial mistake could wipe out everything you’ve worked so hard to leave behind.
With a Lifetime Asset Protection Trust, things work differently. The inheritance stays in trust for your child’s lifetime. The trustee you choose controls when and how distributions are made. That means your child benefits from the trust, but creditors, ex-spouses, and lawsuits can’t touch it. Even better – you can design the trust so your child eventually becomes co-trustee or even sole trustee, once they’re mature and responsible enough to manage it wisely.
Not Just for the Wealthy
You may think this level of planning is only for the ultra-rich. In fact, the opposite is true. If you’re leaving a modest inheritance, protecting it is even more important. A single lawsuit or medical bill could completely wipe out what you leave behind. An LAPT ensures your gift is preserved and used the way you intended – for your child’s security, growth, and future.
An Opportunity to Teach and Guide
Beyond protection, an LAPT can also serve as a teaching tool. You can include provisions that allow your child to learn about investing, charitable giving, or running a business under the guidance of a co-trustee you select. Over time, they can step into more responsibility, eventually becoming sole trustee if appropriate.
This approach not only protects their inheritance, but also helps them build financial skills and confidence – something that can benefit them for life.
A Priceless Gift
When you leave assets outright, you leave them vulnerable. But when you use a Lifetime Asset Protection Trust, you create a legacy of security, guidance, and opportunity.
By building an LAPT into your estate plan, you’re not just passing on money – you’re giving your children one of the most valuable gifts possible: the peace of mind that their inheritance will always be there for them, no matter what life brings.
If protecting your child’s inheritance is important to you, I invite you to reach out. Together, we can design a plan that safeguards what you’ve built and ensures your legacy supports your loved ones for generations to come.
At Cheever Law, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.