3 Traps to Avoid: Creating your Perennial Trust
If you’re like most of my clients, your revocable living trust is the core piece of your estate plan.
Your trust generally covers asset management and distribution provisions that are intended to last for decades. For that reason, your trust must be designed with almost impractical foresight since we can’t predict the future, and we understand that circumstances change all the time - relationships are formed and dissolved, properties are purchased and sold, and perspectives on life and legacy are highly malleable.
With this understanding, there are 3 common traps to consider when drafting or amending your own trusts:
Naming the wrong successor trustee - i.e., the manager of the trust that steps into your shoes upon your death/incapacity.
Is your trustee in the best position to act in the best interests of your beneficiaries (generally, your children)? Do the trustees live nearby? Are they organized? Do they have the time and competency to do the job well? Are they resourceful? Can they solve problems in a rational and impartial manner despite emotional blowback or tension?
Failing to account for obstacles/roadblocks
Do you want to give the trustee absolute discretion or limited discretion? How much authority/power do the beneficiaries have (e.g., can they remove the trustee)? What are the requirements for providing notice and accounting to make sure communication is clear and consistent between trustees and beneficiaries? What happens if two or more persons are serving together as co-trustees and they are in disagreement? What are the terms of removal, resignation, and appointment of trustees?
Being too specific in gifting assets (or being too broad)
This is a tough balance for people that have a complex asset mix (e.g., multiple investment properties or private closely-held businesses/illiquid assets) because there may be certain things that can only be enjoyed or properly utilized by certain beneficiaries that wouldn’t apply to the others, yet the value of those assets may not be equal or could be constantly changing. On the other hand, if certain assets are too unique to bundle into a more uniform percentage or fractional distribution (e.g., equally among my children), then a dispute is almost inevitable. This is where creative solutions and logistics must be added to your trust language to minimize risk and ensure your wishes are fulfilled in a streamlined manner.
If you have any of these concerns with regard to your trust and aren’t sure what to do, then I’d be happy to walk you through your options. Give me a call at 781 202 6368, email jlento@perennialtrust.com, or click here to schedule your free personal consultation.
I’m always happy to help,
Joseph M. Lento, J.D.
Your Local Estate Planning Attorney
www.PerennialEstatePlanning.com
477 Main Street
Stoneham, MA 02180
