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Trusts

What is a trust?

Technically, a trust is a contract containing your instructions so others know what you want to happen and how they can help you. Trusts have been used for hundreds of years; revocable living trusts have been popular for the last 40 years and are commonly part of a foundational estate plan.

The revocable trust is easy; you serve as your own trustee and beneficiary during your your lifetime. Other trusted helpers (i.e. successor trustees) are appointed to jump in and help if: 1. you are incapacitated and aren’t able to manage your finances and day-to-day business and 2. if you've died.

In addition to the revocable trust, there are many other kinds of trusts. Trusts are used to protect qualified retirement trusts, life insurance, and other assets. They are also used to reduce taxes and carry out charitable, family, education, and business goals.

Can my trust be updated?

If your trust is a revocable trust, as most are, you have the power to update it whenever you’d like (so long as you have the mental capacity to do so). Updates which add to an existing trust are called “amendments.” If the entire trust is updated, it’s called a “restatement.” Technically, irrevocable trusts are indeed irrevocable and can't be updated; however, trust protectors, modification provisions, and decanting allow us to update an irrevocable trust that is no longer meeting the trust maker's intent.

Who needs to know I have a trust?

We typically recommend that your loved ones and those you’ve named to serve as trustees, agents, and executors/personal representatives be told you have a trust, where your trust and other important papers are kept, and how to contact us. In addition, it’s essential that the institutions where you hold your assets such as banks and investment companies know you have a trust so your assets are titled properly.

The trustee of my trust just isn’t working out. Can I change the trustee? I’m afraid I’m stuck because the trust is irrevocable. Please help!

You may be in luck because most trust modifications we make involve changing the trustee. Unfortunately, we can only answer generally here because we don’t know the details of your trust or your individual situation, but, yes, often the trustee can be changed, even if the trust is irrevocable. Please call our office ASAP to get on the schedule; we’ll review your trust and let you know the best way to proceed.

I set up a trust for my grandchildren years ago and everything has changed since them. Can I revoke that trust and start over?

What you can do is “decant” your trust, meaning you can take the assets from the original trust and pour them into a new trust, with new and more favorable terms. Decanting essentially would give you the results you’re looking for.

I’m the beneficiary of a trust set up by my spouse when she died. The tax laws have changed significantly since then. Do I have to go to court to change the terms of the trust?

Not necessarily. The simplest way to modify the trust would be if there are provisions within the trust that allow a private modification. Look for “trust protector” provisions. If you’d like help interpreting your trust and get an overview of your options, we’d be happy to review the trust.

How can I include my favorite charity in my estate plan?

Our clients often include charities in their estate plans. You could provide an outright gift during your lifetime, purchase life insurance to benefit your charity, set up a charitable trust or donor advised fund, fund a gift annuity, or create your own private foundation. Or, simply, you could provide, in your will or trust, for a certain percentage of your estate or dollar amount to go to the charity. Fortunately, you have options and we’ll help you determine which option is a good fit for you.

What's a protective trust?

A protective trust is an irrevocable trust, usually for the benefit of someone you love, such as a spouse, child, or grandchild. This trust protects its assets while benefiting the beneficiary. This means trust assets can’t be seized in a lawsuit, divorce, bankruptcy, business failure, or medical crisis.

Interestingly, a protective trust can also protect trust assets from the beneficiary’s own bad habits. For example, sometimes loved ones are spendthrifts, which means they’re bad at managing money and spend every dollar on frivolous expenses. And, unfortunately, sometimes loved ones suffer from addictions: gambling, drugs, alcohol, and the like. A protective trust can be set up to protect the beneficiary from himself by making assets available for living expenses, education, and medical needs, but not providing assets outright which could be used to fuel an addiction or be otherwise wasted.

What is an AB trust?

An AB trust is sometimes included in estate planning to take advantage of tax laws and provide asset protection, remarriage protection, and bloodline protection.

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