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Helping You Navigate Complex Legal Issues

It's important to set aside time to review the terms of your trust

Gregory A. Lang

When a person meets with a legal professional to discuss their estate planning options, there is a very good chance that the conversation will at some point turn to the possibility of establishing a trust.

Viewed by many professionals as one of the best estate planning options available, a trust can ensure that a person's exact wishes for their assets are carried out, minimize tax burdens on their loved ones, protect their assets from a future lawsuit or divorce, enable beneficiaries to avoid the probate process, and keep matters private.

In general, a trust can be either revocable or irrevocable. In the former, the person who creates the trust maintains the right to alter its terms as they see fit and receive any income generated by the trust during their lifetime. In the latter, nothing about the trust can be changed or eliminated prior to the expiration of a specified timeframe.

While there is no disputing just how valuable a trust can be in carrying out estate planning goals, experts caution that just forming a trust is often not enough. Rather, the person who forms the trust -- the trustor -- must be certain to review it periodically.

There is one issue in particular that these experts indicate trustors will likely want to review at some point.

Specifically, they argue that a trustor will want to examine whether the person -- or persons -- they selected to act as trustee remain suitable for the position.

In general, the trustee is tasked with managing the trust assets and distributing them in the accordance with the trust terms. This means that the trustee will not only have to be diligent, trustworthy and fiscally savvy, but also capable of successfully navigating the complex dynamics of relationships with beneficiaries.

"It can be very delicate and you get into cases of pitting family members against each other," said one estate planning attorney. "You can give the trustee a lot of guidance, but you're still not going to be able to answer every question that will arise. The trustee inevitably ends up having to exercise discretion."

If the trustor decides that they would like to appoint a new trustee of their revocable trust, they could consider another trusted individual or even turn to a professional trustee like a bank, attorney or trust company.

Other issues that trustors may wish to review periodically, say experts, is the possible appointment of a backup trustee and the possible inclusion of a trustee removal clause granting beneficiaries the power to remove the trustee in certain circumstances.

In addition to the above issues, a trustor may also want to consider reviewing and changing their trust anytime there is a substantial change in family circumstances or assets.

Remember, an experienced attorney can guide a person through these and all other types of issues related to a trust, answering their questions, explaining their options and ensuring that any changes made are in compliance with state law.

Source: The Dallas Morning News, "A checklist for reviewing your trust," Pamela Yip, April 4, 2014

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