Trust Protectors: A Backup Plan for Future Beneficiaries
This article isn’t new, but it serves to illustrate the point I want to make today about irrevocable trusts, a common device when talking about estate planning and Medicaid planning. One of the main hesitations and drawbacks to using trusts is a perceived loss of control over assets. It’s bad enough for someone to worry about their own financial wellbeing in the future – but what happens in future generations if there is no trustee available to handle the responsibilities of the trust?
An emerging trend in estate planning is to appoint a “trust protector” to prevent such an eventuality. That person has broad authority to reform a trust to appoint new trustees or adapt to changes in tax laws that would benefit the trust. The person is usually a lawyer or sometimes an accountant, and does not get drawn in to the day-to-day administration of the trust. Their specialized experience and expertise can be drawn on in specific situations where court intervention would otherwise be necessary. Their presence helps save costs and time, and makes the trust function more along the lines of how the original grantor (creator of the trust) wanted it to be.
Developments like this are not within the purview of the stereotypical “general practice” attorney who will handle whatever comes in the door. The scary thing is that their clients might not know that there’s a problem until it’s too late (or not at all!). If you have thought about providing for your long-term future and that of your children and grandchildren, I’d be happy to work with you to map it out.