Does Your Trust Do That?
It is a common refrain that we hear, “a trust is a trust, right?” The assumption is that all trusts look and act in the same way. Nothing could be farther from the truth. There are a wide variety of special purposes trusts that come with an alphabet soup of acronyms for names. Is your trust revocable or irrevocable? Is it an RLT, IDIT, ILIT, IDGT, SLAT, QPRT, GRAT, CRUT, CLAT, etc., etc., etc. The list can go on and on.
Even if we are speaking of a revocable living trust (this is the RLT we were referring to above), the most common type of trust, your trust may be quite different depending on the time and effort of the attorney who prepared it (assuming it was even prepared by an attorney). Here are a some of the things we look for in reviewing an existing revocable living trust:
Does your trust clearly identify the name of the trust at the beginning of the document?
Does your trust identify family members and other beneficiaries?
Does your trust provide for after born or adopted children?
Does your trust clearly set forth the respective inheritance of each person?
Does your trust address when it would become irrevocable?
Does your trust clearly identify the successor trustees?
Does your trust state that a co-trustee has authority to act alone?
Does your trust include a procedure for removing a trustee?
Does your trust spell out trustee powers?
Does your trust include trustee compensation provisions?
Does your trust include a procedure for determining your incapacity?
Does your trust include detailed guidelines for administration during your incapacity?
Does your trust include guidelines for distribution of trust funds to or for the benefit of your guardian or the guardian of a beneficiary?
Does your trust include a contingent distribution plan if all the named beneficiaries are deceased, and the trust has remaining funds?
Does your trust provide for a flexible approach to estate and income tax concerns.
Does your trust address what happens if your surviving spouse re-marries?
Does your trust include provisions to protect the inheritance of children and other beneficiaries.
Does your trust include guidelines regarding how and when to distribute assets to the beneficiaries?
Does your trust address the treatment of retirement accounts?
Does your trust include a “Special Needs Trust” option for a disabled beneficiary?
Does your trust include accounting guidelines and reporting requirements for trustees?
Does your trust address trustee authority over a closely held business?
Does your trust include provisions allowing the trust to hold S-Corp stock?
Does your trust include provisions to coordinate with a separate buy-sell agreement of a closely held business?
Does your trust include provisions to enable the trust to appropriately address state laws that regulate “professional practices” such as an accounting or medical practice?
And this is only a partial list of the items we are looking for in a review. So if you still think all trusts are alike, does your trust do that?
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.