Castle Trust Planning2020-07-16T12:34:23-07:00
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“Castle Trust Planning – Protecting Your Children’s Inheritance From Creditors’ Claims, Divorce, and Bankruptcy”
By Robert P. Bergman, Attorney at Law

If you plan to leave an inheritance for your children, you need to be aware that your children’s’ future inheritances are at risk. They are at risk of being lost to creditors’ claims in a lawsuit, lost in a future divorce, or lost in a personal bankruptcy or business failure.

The traditional estate planning process focuses exclusively on passing assets to the next generation only, and often ignores a potential inheritance to be received in the future from parents or other family members. Up to 41 trillion dollars ($41,000,000,000,000!) will likely change hands in the coming decades. Most of these assets will be transferred in a manner that it is not protected from the claims of creditors or former spouses.

Some states permit so-called “self-settled trusts.” Self-settled trusts are irrevocable trusts that you establish yourself for your own benefit. Such trusts are intended to protect the trust assets from your creditors. California, like most states, does not permit self-settled trusts. Therefore, once you or your children or other heirs receive an inheritance in the typical manner, it is too late – the assets cannot be protected.

However, a future inheritance can be “asset protected” through the creation of a “Castle Trust” or “Inheritor’s Trust” that will receive the inherited assets in the future. An Inheritor’s Trust legally protects the inherited assets, yet allows the use of the trust assets to benefit the beneficiary of the trust. An Inheritor’s Trust also removes the value of the assets and their future growth in value from the taxable estate of the beneficiary, so that there will be no federal estate tax due on the death of the beneficiary.

Properly structured, the Inheritor’s Trust can be passed on from generation to generation, asset-protected, and free from federal estate taxes for several generations.

Consider making an appointment to come and meet with me to talk about how an Inheritor’s Trust can be established for your future inheritance, or how you can change your current estate plan so that your children or other heirs can receive this benefit for their future inheritance as well.

Robert P. Bergman is a San Jose estate planning attorney and counselor who devotes his law practice exclusively to assisting individuals and couples plan for incapacity and the eventual transfer of their property to their heirs. Bob specializes in working with parents who have minor children, including special needs children.

Bob gives regular free living trust seminars at his office in San Jose. Visit his website at where you can learn more, get on his mailing list, register for an upcoming seminar, schedule a consultation, and read other articles on estate planning topics that Bob has written. You can also reach him by e-mail at or telephone at (408) 247-0444. All inquiries are confidential.

This article is intended to provide general information about estate planning ideas, concepts, and laws, and is not to be relied upon as rendering legal advice about your particular situation. No attorney-client relationship is created by this article. The laws concerning estate planning, wills, trusts, and estate taxes are very complex, often state-specific, and change on a regular basis. Consult with an experienced attorney before taking any action that would affect your personal or business matters.

Attorney Robert P. Bergman, Board Certified Specialist in Estate Planning, Trust and Probate Law, assists families in the San Francisco Bay Area with Estate Planning, Special Needs Planning for children and adults, special planning for retirement plan assets, and trust administration.

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