The economy is changing, wealth is shifting, and the younger generation is being left behind. That may sound like a bold statement, but it is pretty darn accurate. It’s tempting to just say that this generation just doesn’t understand hard work and saving,but it’s just not true. It seems that every day there is some article about how entire industries are being destroyed because millennials are not spending like previous generations have, but, in reality, they have fewer dollars and are simply prioritizing. Young adults just entering the workforce are facing lower wages, higher costs for everything, and very little chance at accumulating savings the way their grandparents did.

We’re an estate planning and administration firm, so what does this have to do with anything? One possible consequence of having younger generations inherit wealth in an environment where many of their contemporaries can barely get by is frivolous lawsuits. People who have little chance of working their way out of poverty may turn to lawsuits as a way to try to better a desperate situation. This is something my clients will have to start considering when putting together their estate plans, and it may require a more extensive use of protective trusts.

For example, the traditional revocable living trust may simply provide that beneficiaries over a certain age get their inheritance outright. One alternative we’re using more and more is filtering these inheritances into irrevocable trusts for each child where a separate trustee has control. Now that trustee can provide funds when needed, but major purchases like homes can be made in the name of the trust.

The big example I give is, unfortunately, a pretty common occurrence. A married child receives a large inheritance from their parents, and their spouse turnsGrandmother and Grandchild to them and says, “Now we can buy that bigger house we’ve always talked about.” The child buys a house, and the real estate attorney nearly always titles the house in the name of the couple. A few years later, the marriage falls apart, and the spouse demands half of the house. They’re likely to get it because “the assets were comingled” and are no longer looked at as protected in a divorce.

However, if the child’s inheritance went into a Beneficiary Trust, the trustee can use the funds to buy the house and title it in the name of the trust. Now the same divorce comes about, the spouse demands half of the house, and the child gets to say, “I don’t own the house, and neither do you. The trust owns the house.”This same scenario also protects the inheritance from lawsuits, and it can guarantee that whatever funds, if any, that are left over upon the death of the child will go to the grandchildren and not the spouse of the child.

We’re just starting to see these changes emerge in the economy, but the warning signs are there. It might be worth revaluating your tolerance for possible lawsuits against your beneficiaries and whether or not you want to provide a legacy of not just wealth but also protection.