Man playing with child after learning about the benefits of bloodline trusts.

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A Guide to Bloodline Trusts

What exactly is a bloodline trust and when does it make sense to use one in estate planning? Trust & Will explains what you need to know.

Patrick Hicks

Patrick Hicks, @PatrickHicks

Head of Legal, Trust & Will

According to, over half of American families are remarried or recoupled. The traditional, nuclear family is becoming less and less common, and blended families are becoming the norm. However, succession laws that were designed around the nuclear family have not been updated. This means that planning our estate requires more careful planning than ever. If you’re interested in setting some assets aside solely for the benefit of your blood descendants, consider using a Bloodline Trust. Trust & Will explains how this special type of Trust Works, and what you need to know in order to consider whether it makes sense for you to use one.

What is a Bloodline Trust?

A Bloodline Trust is a type of estate planning Trust that is intended to protect assets for the direct blood descendants of the Trustor (the person who created the Trust.)

To understand how Bloodline Trusts work, as well as their benefits, you should first understand how Trusts work in general. In review, a Trust is a fiduciary agreement that allows a third party (a Trustee) to hold, manage, and distribute Trust assets on behalf of its beneficiaries. Trusts are a popular estate planning tool because they bypass the probate process and provide better protections for assets and property. 

There are several different types of Trusts that an individual can use when planning their estate. An individual might choose a Bloodline Trust if they wish to protect their hard-earned legacy for their children and grandchildren, while also giving them access and control over their own inheritances.

Bloodline Trusts are revocable, meaning that they can be changed, modified, or revoked during your lifetime. (This is as opposed to an Irrevocable Trust, which cannot be changed once it is established.) When the Trustor (the creator) passes away, the assets are divided into separate Trusts for each beneficiary. Moving forward, each respective Trust is used for the sole benefit of the beneficiary and their direct blood descendants.

How does a Bloodline Trust work?

A Bloodline Trust can be funded with the assets and property that you intend to leave to your beneficiaries. Once you pass away, the Trust becomes irrevocable, meaning it cannot be canceled or modified in any way. The terms of the Trust are set in stone.

Thus, the assets and property are protected and cannot be accessed by creditors to satisfy debts. If one of your beneficiaries were to go through divorce, their spouse also cannot claim any of it. The Bloodline Trust assets can only be used for the direct benefit of your beneficiaries and their own direct blood descendants.

Eventually, when your Bloodline Trust beneficiaries pass away, any remaining Trust assets are distributed to their children or other blood descendants. Inheritances cannot go to surviving spouses or other third parties. For instance, a surviving spouse cannot inherit your beneficiary’s assets from the Trust, and then pass that inheritance to their new spouse or children. (These individuals would not be your direct descendants.)

In summary, the Bloodline Trust can be used to make sure that assets you leave to your children will remain within your direct bloodline for future generations. This is not to say that you cannot leave assets that can be passed on to other members of the family (through marriage and birth) through other means.

What are the benefits of a Bloodline Trust?

The key benefit associated with incorporating a Bloodline Trust into your Estate Plan is to protect the inheritance you want to strictly set aside for your children and their descendants. 

Here are some additional benefits that make a Bloodline Trust attractive:

  • Assets held in the Trust can only be used for the benefit of your blood descendants. Specifically, assets can be used for their health, education, maintenance, or support only.

  • Bloodline Trust assets are never made available to your in-law children through marriage or divorce. Equitable distribution or alimony laws cannot touch these assets.

  • If your children or their spouses get into any financial trouble, creditors cannot go after Trust assets.

  • You have the option of giving your children control over the Trust. If appointed as a Trustee, your child can distribute assets from the Trust for their own benefit, as well as to their own children.

  • The Trust is terminated at the death of your child. Any remaining assets in the Trust are paid out solely to your child’s own blood descendants.

  • While the Trust is revocable during your lifetime, only you can revoke it.

What are the drawbacks of a Bloodline Trust?

Although a Bloodline Trust offers a myriad of benefits, there are also potential drawbacks to consider. Make sure to thoroughly consider these possible disadvantages within the context of your desired objectives to ensure that you wouldn’t put your childrens’ inheritance at risk:

  • If your child distributes the Trust’s assets to himself or herself, then those assets are at risk of getting squandered.

  • Similarly, once a child receives their inheritance, it can be commingled with the asset of their spouse. In the case of a divorce, it can be subject to equitable distribution.

  • Grandchildren from a first marriage could get disinherited by a second marriage.

  • If Trust assets are distributed and then commingled with the assets of your child’s spouse, your grandchildren could essentially be disinherited if your son- or daughter-in-law squanders it.

Other common questions about Bloodline Trusts

Here are the answers to some of the most popular questions regarding Bloodline Trusts. Let’s get into the details so that you can better determine whether a Bloodline Trust is the right choice for you.

Who serves as the trustee of a Bloodline Trust?

As the Trustor of a Bloodline Trust, you can appoint anyone you see fit as its Trustee. 

If you feel that your child can be responsible in their management of the Trust, you can appoint them as a Trustee. You can also have them share this responsibility with a co-Trustee, such as another child or an independent third party. This gives them complete access and control over Trust assets, allowing them to invest and use assets as they please.

Your appointed Trustee can resign from the role at any time. They are automatically removed in the event of a divorce or lawsuit. They can only be reinstated once the divorce or lawsuit is complete. This further insulates the assets held in the Trust. 

If you are concerned that your child cannot manage the Trust responsibly, you can always appoint a trustworthy Trustee, such as an attorney, financial advisor, or professional Trustee. It’s also a good idea to name a successor Trustee in case your child becomes unfit to serve or passes away.

Are Bloodline Trusts a good idea?

Setting up a Trust to protect your wealth for your loved ones is always a great idea. Family dynamics can be complicated, and it’s hard to predict what could happen in the future, no matter how straightforward or harmonious things might seem in the now.

Here’s an example that can help illustrate what could potentially go wrong in the absence of a Trust.

You recently got married and combined assets with your spouse, totalling $2 million. You were both previously married and each have a child from your previous marriages. You succeed at forming a wonderful blended family. Both you and your spouse update your Wills, respectively, reflecting wishes that your assets pass directly to your surviving spouse. When the surviving spouse passes away, the estate will be divided equally between the two children who each stand to inherit $1 million each.

Decades later, you pass away. As planned, your spouse inherits your estate. However, your death causes strain on your family dynamic. Over the years, your child becomes estranged from their step-mother and step-sister. Here, there is nothing legally preventing your spouse from updating their Will such that the $2 million inheritance passes entirely to her own daughter.

This means that your only blood descendant (your child from your first marriage), could be left vulnerable and inherit nothing. 

If you had instead set up a Bloodline Trust and funded it with $1 million for your child, an entirely different outcome could have been achieved. Your spouse’s child could still inherit $1 million as planned, and your own child would be protected from being disinherited by your spouse.

Create your Bloodline Trust today

Using a Bloodline Trust in your estate plan might not seem necessary or even appropriate at first, but only one thing remains certain: the future is utterly uncertain. 

While we are completely in control over our own assets during our lifetime, it is an entirely different story after we pass away. Years and decades can cause changes in family dynamics and what you initially envisioned for your estate plan could potentially no longer hold true. 

Because the future is uncertain, there is nothing wrong with protecting your children and grandchildren. This is for the exact same reason why a loving couple entering marriage will protect themselves by signing a prenuptial agreement.

If you would like to set up a Bloodline Trust or other type of Trust, Trust & Will is here to help! Our online platform offers a Trust-based Estate Plan that is not only affordable but easy to put into effect. Explore your options here today!

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