I’ve got a confession to make. I know that some of the provisions that I include in the trusts that I draft for my clients will never be used. That might be why some people think I get paid by the pound; the thicker and heavier the trust is, the more I can charge for it, right?
The reality is that I don’t get paid by the pound, and while I know that most of what is in each trust will never be used, I have no way of knowing what parts will be used. I like to compare drafting a trust to packing for a vacation. Before you leave on your trip, you check to see what the weather will be at your destination. If you expect sunny weather, you are going to pack your shorts and warm weather clothes. But you will also pack a sweater and long pants, just in case the weatherman missed something. You don’t expect to use your warmer clothes, but you better have them with you in case you need them.
As an estate and trust attorney, I do the same thing. If I want to protect my clients, then I must put into the trust all of the provisions that may be needed, even if I don’t expect to use them all. With trust drafting, unlike being on a vacation, you can’t simply head to the store to buy what you forgot in the first place.
So what are some of the provisions that take up so much space and make the trust so heavy? Here are just a few of them:
Incapacity Planning—it’s usually pretty easy to tell when someone has died, but it can be much more difficult to determine when someone is incapacitated. Make sure your trust has specific provisions defining incapacity. Your trust should also include specific directions to your trustee as to how your trust assets can be used when you are incapacitated. For example, do you want your trustee to be able to use your assets to care for your spouse or dependents, in addition to you? If so, you better include those provisions in your trust.
Public Benefits Planning—Do you have enough assets to pay for your long term care should you need it? At an average cost of over $6,000 per month, it won’t take long for most estates to be depleted. Does your trust have specific provisions which allow your trustee to speed up your qualifying for long term care benefits, such as Medicaid or Veterans Affairs benefits, without having to deplete your estate?
Remarriage Planning—if you pass away, will your spouse remarry? Will he or she be tempted to give everything to the new spouse, effectively disinheriting the children? You may say it won’t happen to you, but we all know people that it has happened to. Unless you don’t mind your assets going to your spouse’s new spouse, you better address this in your trust.
Beneficiary Protection—Is the inheritance you leave your beneficiaries protected? If one of your beneficiaries should get a divorce or get sued, can an ex-spouse or creditors get to his or her inheritance? If you want to protect the inheritance, you must include provisions in your trust before the divorce or lawsuit happens.
Of course, there are many, many more provisions which should be in your trust, but I think you get the idea. You might be tempted to save a few pages and get a trust that is much shorter, or even much easier to read. But be careful! You only have one chance to get your trust right, and you won’t know if there are problems until it is too late to do anything about it.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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