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The KRASA LAW, Inc. Estate Planning Blog

Tuesday, July 24, 2012

Does My Non-Existent Will Exist?

Estate Planning is a fluid process.  What makes sense today, might not make sense tomorrow.  If you ever contemplated planning your estate, you might have realized that from time to time you change your mind about who should receive certain specified assets upon your death.  You might change your mind so frequently – particularly with respect to gifts of tangible personal property – that you might wish there was a way to add flexibility to your Estate Plan.  Most Estate Plans are revocable, meaning that you may change any aspect of your plan by executing a formal amendment or a codicil.  However, you might be tempted to “shortcut” the process by referring to a future created document that will specify how certain assets shall be distributed.  The thinking is that you would save the time, effort, and expense of drafting a formal amendment or codicil by simply having your will or trust refer to a list that you would create later, on your own.

For years, such reference to a future created document was not allowed under the law for fear that after your death, it would be too easy for an unscrupulous person to forge a list that would alter the distributions from your estate.  The thinking was that it would be much more difficult to forge a formal notarized amendment or witnessed codicil. 

Despite the fact that it was not legally recognized, this method of “incorporation by reference” of a future document that does not exist at the time the will or trust is executed was always very popular.  A few years ago, the legislature in an effort to accommodate this popular procedure, changed the law to allow for the incorporation by reference of a future document under certain conditions.

First, the future writing must only refer to gifts of tangible personal property such as jewelry, clothing, furniture, and other household items (i.e., not cash, real property, automobiles, etc.).  Second, each item distributed by a future writing must have a date of death fair market value of $5,000 or less. Finally, the total amount of assets distributed in this manner must not exceed $25,000.

When this law was passed, a common criticism was that these strict rules will still frustrate the intent of many testators as they may not be careful to adhere to the strict rules, may not know about the rules, or may underestimate the value of the assets they are distributing in this manner.  Some wills or trusts might attempt to mitigate these potential problems by stating that if a future writing cannot be incorporated by reference under the law, then such a future writing shall be considered a valid amendment or codicil.

If you are not worried that beneficiaries or heirs will fight over such items tangible personal property if they are aware of your intent, then using this method might be appropriate.  However, if there is any doubt, it is safer to avoid this perceived shortcut and simply execute a formal amendment or codicil to ensure that your wishes will be carried out.


Friday, June 29, 2012

When Equal Shares are Not Equal

Upon first blush, you might think that dividing your estate into equal shares for each of your children is the best way to achieve equality and fairness.  After all, what could be more reasonable than giving every child an equal amount?  In general, this might be true.  But for some children, particularly minor children and young adults, equal shares do not mean equal treatment.

When children are minors or young adults, they have different needs at different points in their lives.  A 10-year-old might need braces, a 15-year-old might need money for soccer camp, and an 18-year-old might need college tuition or textbooks.  The 23-year-old eldest sibling might have already have benefited from your entire estate for all of these needs.  Would it really be fair to divide the estate into four equal shares should you die while your four kids are these ages? 

In this example, the eldest child’s 1/4 of the estate would be too large because he already benefited from 100% of your estate for many of his childhood needs whereas the youngest child’s 1/4 share would be too small because she still has additional needs that were already addressed for the other children.

The solution is to create a “common pot trust.”  The idea is to keep the entire estate in one share that is available to any of the children for their needs.  The trustee is given discretion to distribute the estate unequally to any of the children for their needs.  This way, the older children who have already benefited from the entire estate won’t receive a specified share until the younger children have the opportunity to benefit from the entire estate for their needs that are unique to their young ages.

Eventually, when all of the children have reached an age where basic needs of adolescence are addressed, the common pot trust extinguishes and the balance of the trust divides into equal shares.  The trigger for extinguishing the common pot trust is usually when the youngest child reaches a specified age. 

Although the common pot trust is not for everyone, it is often worth considering when you have multiple children who are minors or young adults.
 


Wednesday, June 13, 2012

Unloading that Timeshare - Not an Easy Task

Many people enjoy timeshares as they provide an opportunity (and a built-in excuse) to take time away from work and to travel the world.  However, a timeshare is a firm financial commitment – dues are often owed at least on an annual basis.  For many, after a few years of enjoying vacations, timeshare owners often find that they don’t use their timeshares as much – if at all – but are required to continue to pay the dues.  They decide to sell their timeshares when they learn that the secondary market for timeshares is quite grim.

After paying agents or an internet company to list their timeshares for sale and having no luck, some timeshare owners attempt to give away their timeshares but find that the ongoing financial commitment makes them unattractive gifts.  Some then consider simply “walking away” by withholding payment on the dues.  While desperation can make this option seem attractive, a breach of contract is never a good idea and it could introduce a whole host of legal problems.  

On several occasions, clients have asked me the best way to “get out” of a timeshare.  Obviously, most clients expect that I might have a legal solution.  However, sometimes the practical solution is the better strategy.  Over the years, I discovered a number of practical options that have allowed me to develop a process for attempting to relieve clients of the responsibilities of timeshare ownership.  If you are “stuck” with a timeshare, consider the following steps.

1.  Contact the Timeshare Company

In this economy, many people are defaulting on their timeshares just as they are defaulting on other obligations.  Many timeshare companies are currently offering timeshare owners out of their contracts.  Often the conditions require that all outstanding dues or debts be paid, that the timeshare owner surrenders all rights to the timeshare, and that the timeshare owner pay a transaction fee of a few hundred dollars.  The timeshare companies rarely “advertise” this option but if you dig around, you might find that your timeshare company has such a procedure.  If the procedure is available, take it – it is worth the few hundred dollars to unload what has become a financial burden.

2.  Consider Gifting to a Friend of Family Member

While you might not have use for your timeshare anymore, you might have a friend or a family member who wouldn’t mind paying the annual fee.  

3.  Consider Listing the Timeshare for Free on Craigslist

People are interested in all sorts of things on Craigslist.  If you have trouble finding a friend or a family member who would be willing to take a timeshare off your hands by assuming the financial obligation, consider giving it away on Craigslist or a similar online classified website.  Be sure to have the transfer documentation ready so if you find a willing recipient, you can give it away without much hassle.

4.  Consider Donating the Timeshare to Charity

To my knowledge, there is only one charity in the entire country that accepts timeshares as donations.  You sign paperwork agreeing to donate your timeshare to the charity.  The charity attempts to sell the timeshare for a bargain price through a real estate company.  Until the sale is made, you continue to be responsible for all the dues and fees on the timeshare.  Once the charity finds a buyer, the proceeds from the sale are donated to the charity and the timeshare is off your hands.  Furthermore, you receive a charitable deduction.  This worked out for a few of my clients in the past.  However, lately even the charity has struggled to find buyers willing to pay even bottom of the market prices for timeshares.  As a result, despite the potential for a charitable deduction, this option has fallen to last place on my list of options.  

While unloading a timeshare is never easy, the good news is that there are a number of options worth exploring.  In the end, tenacity and prudence make the difference.  
 


Wednesday, May 30, 2012

Which Trust Controls?

One of the most important aspects with regard to trust-based estate planning is funding the trust.  A trust only controls assets that are titled in its name.  This is why creating the trust is only half the work.  The other half of the work is to draft documents, deeds, and forms to ensure that all assets are titled into the name of the trust.  After this initial work is completed, it is imperative to make sure that, going forward, all assets acquired after creating the estate plan are titled to the trust.

The most common type of trust funding problem is the failure to transfer some assets into the trust.  Such a failure creates a scenario where some assets are titled to the trust while other assets are still in the trust maker’s individual name.  The assets that are in the trust can be transferred to the beneficiaries without court involvement while the assets that are not titled to the trust will be subject to another procedure, perhaps even probate, depending upon the nature of the asset and the total value of the assets that are outside of the trust.

Another problem occurs when a person creates a second or third trust, perhaps intending to revoke or change a previous plan, but fails to transfer all assets to the new trust.  The result is that some assets are titled to the older - and perhaps out-of-date trusts - while other assets are titled to the new trust.  While it might be argued that the trust maker only intended the most recent trust to control all of his/her assets, legally, each trust remains effective and controls its own assets. 

If the trusts have different trustees or different beneficiaries, some assets will be distributed one way and other assets will be distributed another way.  The situation will cause confusion, delay, expense, and possibly hard feelings or litigation. 

Trust funding can often be confusing and more detailed than one might think.  This is why it is important to have an attorney who handles the funding rather than relies upon the client to be responsible for the funding, which is a crucial aspect of the estate plan.
Another way to guard against this potential problem is to amend the existing trust rather than create an entirely new trust.  If the trust maker wants to change everything in the trust, he/she can simply restate the existing trust, amending it in its entirety, while keeping the same original trust name and same original trust date so that all previous funding is still valid.  This will ensure that 100% of the assets are controlled by the most recent version of the estate plan.

This potential problem illustrates why it is paramount to have a comprehensive and detailed approach to estate planning, even when a given estate appears to be “simple.”
 


Wednesday, May 9, 2012

An Eternal Presence

My mother died a week after Valentine’s Day of my senior year in college.  I flew home to California from my school in Vermont to spend time with my family and attend her “celebration of life.”  Upon my return, I went to the campus post office to pick up my mail.  When I opened my mailbox, waiting for me was a card from my mother.  For a brief moment I thought that my mother’s death had all been a bad dream.  Then suddenly I realized that she must have sent the card right before she died.  I opened it to discover that it was a belated Valentine’s Day card which read, “Do you know how much I love you?”  The experience was actually very comforting – it was as if my mother were still present.

I was reminded of this episode when I recently thought about my own estate plan for the benefit of my son who is about to turn two years old.  Being an estate planning attorney, I made sure that my wife and I nominated guardians to raise him should something happen to both of us before he becomes an adult.  We tried to identify the core values that we would want his guardians to possess and considered practical issues such as the potential guardians’ locations and whether he’d be able to remain in the same school.  We thought about whether the same persons we nominate as guardians should also be named as trustees to manage his inheritance, or whether it would be better to have a system of checks and balances.  We even named temporary guardians so that in an emergency, he wouldn’t automatically be placed in child protective services while the Court took the time to officially appoint a guardian. 

But I realized that, despite all of this detailed, legally-centric planning, we overlooked one key element: how will we continue to be a presence in his life?  Right now, we are his whole world.  But if something happened to us, would we become a fading memory?  Is there anything we can do about this?  And then I remembered my mother’s last Valentine’s Day card.

What if when I graduated from college, somebody handed me a letter that my mother had written before her death telling me what it means to apply my education to the “real world”?  What if when I received the positive results of the Bar Exam, somebody handed me a letter from my mom about what an incredible accomplishment I achieved?  What if at my wedding, somebody handed me a letter from my mom about love and commitment?  What if when my son was born, somebody handed me a letter from my mom about the instant and unconditional love a parent has for a child?  I thought about how I was lucky enough to have that comforting experience once, by accident.  It would have been wonderful if I could have had that experience over and over again throughout my life.

In addition to making all the important legal and practical plans, I realized that my wife and I – as well as all parents of young children – should spend a weekend sitting down and thinking about what messages we plan to give to our son at certain milestones of his life.  We should memorialize those messages in personal letters.  Hopefully, we’ll be able to actually read those letters to him.  But, should we not be that fortunate, we will ensure that we will have some presence in his life well into the future.


Tuesday, April 24, 2012

What is the Difference Between a Revocable Trust and Irrevocable Trust?

In my last two columns, I spoke about the various methods of modifying both revocable and irrevocable trusts.  This series of articles provoked the obvious question from a few readers: What is the difference between a revocable trust and an irrevocable trust?

Revocable Trust

A revocable trust is the most common and basic type of trust.  When you create the trust, you as the trust maker, reserve the power to change anything about the trust at any time without the need of obtaining permission from anybody.

The beneficiaries of the revocable trust have no legal right to any of the assets of the trust.  You can change the beneficiaries at your whim and thus the beneficiaries merely have an “expectancy” of inheriting something from you but are not guaranteed or promised anything.    

Because you have full control and because you can change anything about the trust at any time, for the most part, the trust is not considered to be a separate entity from you.  All the assets in the trust are still part of your estate and you use your Social Security Number as the Tax Identification Number of the Trust.  Your state and federal income taxes, your property taxes, and your estate taxes remain exactly the same as if you never created the revocable trust in the first place.  The trust serves as merely a “pass through.”

If everything is the same, why create a revocable trust in the first place?  The reason is to create a contingency plan in case you become incapacitated or pass away.  Your trust will name a successor trustee and give that person instructions on how to pay your bills, manage your property, and distribute your assets to your beneficiaries.  This is the essence of estate planning and in the vast majority of situations, the revocable trust is the most efficient way to ensure that your wishes are carried out smoothly and with the least expense possible upon your incapacity or death.

Irrevocable Trust

An irrevocable trust is a trust that cannot be changed easily by the trust maker once it is completed.  As I mentioned in a previous article, you still might be able to change your irrevocable trust, but you need to often obtain permission from the beneficiaries, the Court, or both. 

The beneficiaries have an enforceable right to the trust assets, rather than merely an “expectancy” as with revocable trusts.  The trustee must take special care as to consider not only the current beneficiaries of the trust but also the remainder beneficiaries: sometimes this can be a very tricky balance. 

An irrevocable trust is considered a separate entity from you as an individual.  Often, you will need to obtain a new Tax Identification Number for the trust.  Transfers of assets into the trust will often be considered taxable gifts and such assets will generally be removed from your estate.  The irrevocable trust can be drafted in such a way as to place income tax liability on the trust itself, requiring the trust to file its own tax return, or can be drafted in such a way to keep the tax burden on you as the trust maker.  

Reasons for creating irrevocable trusts include tax and gift planning, planning with life insurance, ensuring that assets in the trust are used to carry out a specific purpose such as caring for a pet or providing a person with a legal defense fund, planning for minor children, and – in some circumstances – providing asset protection to the beneficiaries.


Tuesday, April 10, 2012

Irrevocable Trusts: Not Necessarily Set in Stone

In my last article, I discussed the typical procedures for modifying revocable trusts.  I noted that a trust in California is presumed to be revocable unless it indicates otherwise.  However, there are many reasons why you might decide to create an irrevocable trust such as tax planning, gifting, special needs planning, and asset protection planning.  But what happens if you have a change of heart after establishing an irrevocable trust?  Is it too late to change your mind?

Fortunately, the California legislature recognizes the problem of “dead hand control” and allows several procedures for modifying irrevocable trusts.  A few of the most common procedures are detailed below.

1.  Consent of Settlor and All Beneficiaries.

If the trust maker (also referred to as the “settlor”) and all the beneficiaries of the irrevocable trust agree to a particular modification, they may modify the trust in writing privately, without the need of obtaining court approval.  If not all of the beneficiaries agree to a particular modification, the beneficiaries who wish to modify the trust may petition the court to approve a particular modification, provided that they have the consent of the settlor.  The court has the discretion to approve the particular modification as long as “the interests of the beneficiaries who do not consent are not substantially impaired.”

2.  Consent of All Beneficiaries.

Sometimes the desire to modify an irrevocable trust does not develop until after the settlor has become incapacitated or has passed away.  In these circumstances, it is still possible to modify an irrevocable trust if all the beneficiaries agree.  Without the ability to obtain the consent of the settlor, the beneficiaries must obtain court approval.  The court will typically approve of the proposed modification as long as either no “material purpose” of the trust is affected by the proposed modification or that the reason making the modification outweighs the material purpose of the trust. 

3.  Changed Circumstances.

Sometimes circumstances change.  What makes sense to the settlor when establishing the irrevocable trust might not make sense years later.  A trustee or beneficiary may petition the court to modify or terminate an irrevocable trust if “owing to circumstances not known to the settlor and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust.” 

As the aforementioned examples articulate, an irrevocable trust is not necessarily set in stone.  Most people – including attorneys – assume that it is impossible to change an irrevocable trust, but there are several procedures worth investigating if there is a desire to make a change to an irrevocable trust.  Once these procedures are understood, opportunities for advanced and creative planning become abundant. 

When attempting to modify an irrevocable trust, it is very important to be mindful of the tax implications of the particular change and to be very careful so as not to create any unintended consequences.  However, it is important to remember that even with an irrevocable trust, you are not necessarily “stuck” with an outdated plan.


Monday, March 26, 2012

Revocable Trusts: Not Set in Stone

As General Patton once famously said, “A good plan today is better than a perfect plan tomorrow.”  In the context of estate planning, most clients understand this adage and create an estate plan even if they are not 100% sure of their wishes.  They know that it is important to avoid procrastination and that they may always change their estate plan in the future should they later develop a better idea of their wishes. 

Living trusts are central to most estate plans.  In California, a trust is presumed to be revocable unless it states otherwise.  However, even if a trust is revocable, it is important to follow the proper procedure for modifying it in order to make the changes effective.

If the trust dictates a specific procedure for making modifications, that procedure controls.  Absent a specific procedure, a trust must be amended by a separate writing clearly stating the changes, signed by the trustmaker, and delivered to the trustee. 

Some individuals think that it would be easier and less expensive to simply cross out provisions of the trust and write in their changes.  Others try to type something themselves, often overlooking the specific procedure or the various nuances of the trust instrument that render the attempted change void.  Once, I even saw a client attempt to make modifications by scotch taping updated typed clauses over the existing trust document – literally a “cut and paste!” 

While these “do-it-yourself” methods of modification might seem easy and straightforward, it is important to spend the time, effort, and fee to have a qualified attorney prepare your modification in order to ensure its efficacy. 

A modification might consist of a simple amendment if there are only one or two details of the trust that the trustmaker wishes to change, such as the addition or subtraction of successor trustees or a change in the amount that a beneficiary receives.  This would be akin to “changing sparkplugs.”  However, if the trustmaker wants to make structural changes to a trust, or if the trustmaker has many details that he or she would like to change, the trustmaker likely would be better served by creating a “restatement,” an amendment that changes the trust in its entirety – in other words, a “full body restoration.” 

Many married couples have an “A/B trust” which means that the trust is wholly revocable while both spouses are living.  However, when the first spouse passes away, part of the trust becomes irrevocable, unless the surviving spouse is given a “power of appointment.”  Occasionally, the surviving spouse mistakenly assumes that he or she is able to make changes to the entire trust after the death of the first spouse.  If the surviving spouse attempts to make such a change without the aid of a qualified attorney, the surviving spouse might never realize that his or her changes were not effective.  The good news is that even irrevocable trusts may be modified under certain circumstances. 

In my next blog, I will discuss the various methods of modifying irrevocable trusts.


Monday, March 12, 2012

Who Will "Parent" Your Children

Most people do not get around to planning their estates until later in life, long after their children have all grown up and moved out of the house.  It is rare to find a young person thinking about estate planning.  The reason is that most young people feel that they have more debt than equity and they do not think that it is likely that they’ll become incapacitated or will die in the near future.  It is easier to put off thinking about such grim things until the time is “necessary.”  However, young people who have minor children of their own need to create an estate plan now that includes extensive guardianship provisions.

Guardians can be nominated by parents to both (1) be responsible for their children’s care, custody, control, and education and (2) be responsible for the management and control of their children’s property in the event that the parents can no longer fill these essential roles due to incapacity or death.  The parents can nominate the same person or persons to fill both roles or can nominate one set of guardians to be responsible for the minor child’s custody and personal needs and a second set of guardians to manage the minor child’s property.

Parents may nominate a guardian in writing.  The writing may be part of a will, a power of attorney, a trust, or may be a separate, independent document.  The writing typically states the circumstances under which a guardian is nominated, such as the death or incapacity of both parents.

When a guardian is needed, the Court will then appoint a guardian and will give strong consideration to the person or persons whom the parents nominated in writing.  The Court will want to ensure that the proposed guardian really will be a beneficial choice for the minor children, but, barring any problems, the court will likely abide by the parents’ choice.

By nominating a guardian in writing ahead of time, the parent’s plan will most likely reduce delay in the procedure for appointing a guardian and avoid a family dispute over who should be appointed as the guardian.

Because the formal legal appointment of a guardian does not happen instantly, there is a strong possibility that in an emergency, law enforcement will place minor children in Child Protective Services until the Court formally appoints the guardians nominated by the parents.  In order to prevent this from happening, it is prudent for parents to sign a second writing, nominating “temporary” guardians until a permanent guardian can be appointed by the Court.  This additional document should include specific instructions that it is the wish of the parents that the children be placed in the custody of the temporary guardians rather than Child Protective Services until such time as the Court can appoint permanent guardians.

The additional “temporary” guardianship nomination can be especially helpful if the permanent guardians do not live locally and law enforcement must find temporary placement immediately.  However, even if the temporary guardians are the same as the permanent guardians, because the guardians do not become permanent until after the Court formally appoints them, the additional “temporary” guardianship appointment is important in all circumstances.

Although most young people do not think they need to worry about estate planning, issues surrounding the custody, care, and upbringing of minor children introduce a whole host of concerns unique to their circumstances that make planning ahead essential, despite not having a significant estate or any immediate known health problems. 
 


Wednesday, February 29, 2012

Papers, Please

Managing the affairs of a decedent’s estate is never easy.  Not only are you in shock and grief over losing a loved one, but you are forced to navigate complex rules and barriers when attempting to settle the estate.  Gaining access to accounts or even basic information can seem like an insurmountable hurdle.  If the decedent did not have his/her assets titled to a trust, you will likely be asked to present “Letters of Administration” to the financial institutions before you are allowed any control over the accounts. 

“Letters of Administration” (or “Letters Testamentary”) refers to a document that the court issues to an executor (also known as a “personal representative”) of an estate which gives that person court authority to access the decedent’s accounts.  The problem is that in order to obtain the Letters, you must open up a formal probate which is time consuming, public, and expensive.

You want to avoid probate if you can help it.  Contrary to what a financial institution might tell you, you might be able to avoid a probate if the estate falls within certain categories.

First, if the decedent created a trust but left some bank accounts outside of the trust, you might be able to use a procedure known as a “Heggstad Petition” if there was any writing (such as a “Schedule A”) that provides evidence that the decedent intended to transfer the accounts into the trust.  A “Heggstad Petition” is rather simple and inexpensive, especially when compared to a probate.

Second, the estate might fall into a category known as a “small estate.”  If the total value of the decedent’s estate is worth $150,000 or less, then a “small estate affidavit” would generally be available to take control of the decedent’s personal property, including bank and stock accounts.  Rather than going to Court, certain individuals known as “successors to the decedent” can simply wait 40 days, sign a one-page affidavit containing specific provisions, present it to the bank, and legally compel the bank to transfer the decedent’s accounts. 

Third, for surviving spouses of the decedent, sometimes all or part of the decedent’s property automatically passes to the surviving spouse by operation of law.  If the financial institution refuses to accept this fact, the surviving spouse might decide to pursue a “spousal petition,” a simple petition requesting that the Court issue an order that the decedent’s property in fact belongs to the surviving spouse.

Unfortunately, most employees at financial institutions are unfamiliar with these alternatives to probate and are trained to simply tell you that Letters are required in order to proceed.  This “papers, please” approach can create unnecessary problems if you are not aware that there might be methods other than probate to settle the estate.  An attorney who specializes in estate planning can figure out whether a probate alternative is available, thus saving a great deal of time, effort, expense, and frustration.


Tuesday, February 7, 2012

The Superhero of Trusts!

You’ve known for years that you need to “get your affairs in order.”  While you don’t like thinking about it, you know that you are merely mortal and that it would be wise – a gift to your loved ones, in fact – to create an estate plan that allows a trusted person to handle your personal and financial affairs in accordance with your wishes in the event of incapacity or death.  You finally decided to visit your estate planning attorney to address all these lingering issues that you have been mentally and emotionally postponing for far too long.


Your main estate planning document is your revocable living trust.  It clearly dictates who will inherit from you (your “beneficiaries”), how they will inherit, and who will manage your finances in the event of your incapacity and administer the trust upon your death (your “successor trustee”).

 
You are comfortable with your trust as it clearly expresses your intent in a legally binding manner.  You know, however, that circumstances might change: what seems like a good idea today might turn into a disaster tomorrow.  Your beneficiaries might develop special needs or financial / lawsuit problems, the trusted friend or advisor you named as trustee might turn out to be unreliable or deceitful.  You know that as long as you are alive and have capacity, you can change any part of the trust.  But is there any hope after you become incapacitated or pass away?


The solution may be to name a trust protector in addition to a trustee.  A trust protector is a third party who is independent from the trust.  The trust protector has certain powers to protect your overall intent of the trust.  The concept originated in the context of complex offshore irrevocable trusts that were designed for asset protection, but has evolved to be useful in the context of a many common domestic trusts such as life insurance trusts, gifting trusts, and even revocable living trusts.


Some of the powers of a trust protector might include the ability to hire and fire trustees, the ability to change the governing law of a trust, the power to resolve disputes between co-trustees or disputes between trustees and beneficiaries, the ability to veto investment decisions of the trustee, and the ability to modify the trust to keep up with current law or to provide better protection to a beneficiary.  With these powers, just like a superhero, the trust protector can jump in to protect or save the trust when necessary.

 
If a trust is irrevocable at the start, designating a trust protector is a way of maintaining flexibility and control over the trust.  If a trust is revocable at the start – such as a revocable living trust – having trust protector provisions can provide flexibility and control when the trust eventually becomes irrevocable upon your incapacity or death.  


Figuring out whom to designate as your trust protector can be challenging.  While the trust protector does not have the day-to-day responsibilities of your trustee, your trust protector generally has more sophisticated powers and duties.  Generally, naming a trusted advisor such as a CPA or an attorney as your trust protector makes sense.  Alternatively, you may decide not to name a trust protector at the outset, but have provisions that provide a procedure for naming a trust protector in the future if one is needed.


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KRASA LAW assists clients with Estate Planning, Elder Law, Pet Trusts, Asset Protection, Special Needs Planning and Probate / Estate Administration in Pacific Grove, CA(93950), Monterey (93944, 93940, 93943, 93942), Salinas (93901, 93905, 93906, 93907), Hollister (95023,95023) Pebble Beach (93953), Carmel By The Sea (93921), Seaside (93955) and Carmel (93923, 93922) in Monterey County and San Benito California.

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