First 6 Things to Think About When Designing a Trust for a Beneficiary After Your Death
As I stated in my last blog, the ways you pass the assets on to your beneficiaries determines whether or not there is any asset protection for thos assets. In the end, most clients want to make sure it is their family who enjoys the assets and no one else. Below is the first 6 in a list of 12 things you should think about when designing your estate plan. Remember, this is a very conservative list and dependent on various state laws.
1) Do not appoint the beneficiary as a Trustee, or if the beneficiary serves as their own Trustee, vest the distribution authority solely in an independent Trustee.
2) Make all interest in income and principal discretionary unless a mandatory income interest is required to qualify for a tax benefit. The assets left to a surviving spouse, to qualify for estate tax deferral, must pay all the income to the surviving spouse.
3) Provide that distributions of income and principal may only be made in an independent trustee's sole, absolute, uncontrolled, unfettered, unlimited and full discretion.
4) Do not give a beneficiary with a withdrawal right over trust assets.
5) Draft the trust to continue for a beneficiary's life rather than providing for outright distributions or unfettered withdrawal rights.
6) Do not give a beneficiary a testamentary general power of appointment unless it is required to qualify the trust for a tax benefit.
My next blog post will finish the list of things to think about when designing your estate plan. To have your estate plan reviewed to ensure it is designed to meet your needs, please consult an estate planning attorney.
