When you create your estate plan, the thought that one of your children might use their inheritance to fund something dangerous probably feels impossible. Yet, that’s exactly what happened to Clare Bronfman, heiress to the Seagram’s liquor fortune.
Clare inherited an enormous amount of money. Instead of using it to build a strong future, she poured roughly $150 million into Nxivm – a so-called self-help group that turned out to be a manipulative cult. Under the influence of its leader, she financed lawsuits, bad investments, and ultimately crimes. Clare eventually pled guilty to felony charges and served prison time.
Her story shows us something important: money without protection and guidance can do real harm. And while Clare’s case is extreme, the truth is that inheriting large sums – at any age or income level – can bring risks you may not expect.
Why Leaving Money Outright Can Be Risky
Leaving wealth outright to your children or grandchildren may feel like a gift, but it can also create unintended problems. Inheritance, no matter the amount, can:
- Attract manipulative people.
- Be lost in a divorce or lawsuit.
- Disappear through poor spending habits.
- Vanish in the face of medical bills, debt, or accidents.
Even responsible heirs can face circumstances that threaten their inheritance. That’s why it’s so important to plan ahead – not just for transferring wealth, but for protecting it.
The Lifetime Asset Protection Trust
One of the most powerful tools I recommend is a Lifetime Asset Protection Trust (LAPT). This type of trust keeps your child’s inheritance safe for their entire lifetime while still giving them access to use and invest the assets.
Here’s what makes an LAPT unique:
- Asset protection: The inheritance is shielded from divorce, creditors, lawsuits, and unexpected financial problems.
- Discretionary control: Assets are not handed over all at once. Instead, a trustee manages distributions based on your guidance. This protects your heirs not only from outside threats but also from their own potential mistakes.
- Built-in education: You can structure the trust so your child becomes a co-trustee at a certain age, learning responsibility under the guidance of another trustee, before eventually taking over as sole trustee later in life.
Your Guidance Matters
With an LAPT, you can also leave non-binding instructions for the trustee to follow – your “voice” guiding how the trust is managed. For example, you may want funds to be available for:
- Buying a first home
- Paying for education
- Starting a business
- Medical expenses
- Travel or family experiences
You can also provide direction on how you’d want investments to be handled. This way, your values are reflected in how the money is used – not just your dollars. Over time, your child may even take over as trustee themselves, while still keeping the asset protection benefits in place.
Don’t Leave It to Chance
It’s easy to assume your children or grandchildren will always make good decisions, but life has a way of throwing surprises at us all. Inheritance without protection can lead to consequences as serious as Clare Bronfman’s story – or as common as divorce, debt, or financial mismanagement.
A Lifetime Asset Protection Trust ensures your gift of wealth truly benefits your loved ones, rather than becoming a burden or temptation. By planning ahead, you can give your family not just money, but lasting security, guidance, and protection.
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.