Why put an age limit on the ability to protect assets from creditors and predators?
Many trusts direct that young beneficiaries will receive distributions of trust principal (corpus) when they attain certain ages. The intent of this language is usually to protect the beneficiary from herself until she is sufficiently grown-up to manage the funds effectively. This language also protects the beneficiary from creditors--until they reach a distribution age.
But grown-ups need asset protection, too. Why put an age limit on the ability to protect assets from creditors and predators?
The young homebuilder was doing pretty well until a lawsuit involving negligence on the part of a subcontractor pulled him into litigation, ending in a judgment against him just a few days shy of his 30th birthday.
A teacher with very wealthy parents was shocked to learn that her husband of 10 years was suing her for divorce only months after she received her final trust distribution at age 35. She had used all the previous distributions to acquire jointly owned rental properties.
Both of these are real-world examples of beneficiaries losing control of trust assets because the grantor of the trusts tried to give them control over time.
Pick up almost any will or revocable trust document, and you will find language that directs the executor or trustee to hold assets in trust until the beneficiaries attain age 21, 30, 35 or even older. These distributions will usually be fairly large percentages of the trust assets, such as one-third or one-half. Grantors often use this staggered distribution strategy with the thought that their loved ones will achieve emotional and fiscal maturity by these ages, and they want them to have full control.
Beneficiary as Trustee
As the examples above show, this strategy is flawed. If one assumes that children or grandchildren will be able to handle wealth at these ages, consider giving them the ability to manage their wealth while providing some protection from creditors and predators. Consider letting the beneficiary become the successor trustee of an irrevocable subtrust at an acceptable age as determined by the testator or grantor.
A will, or even better, a revocable trust can create subtrusts upon the testator's or grantor's death. These could be trusts having multiple beneficiaries such as "all my grandchildren" where the trustee has discretion over how to spend money on each child, based on each child's specific needs, also called a "family pot trust." You could also establish separate sub-trusts for each beneficiary.