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Living Trusts
Review all Current
Living Trusts Now
Attorneys have advised us that many Living Trusts that have been
created in the past should be reviewed. There are many reasons
for that, including changes in family circumstances and changes in the
law. There are also changes in the external environment that
could have an impact upon how you might want to amend your current
living trust.
One of the most important changes that has taken place over the past
decade is the increasing level of litigation that could threaten the
assets in a Living Trust. Most individuals and couples we know
who have created living trusts in the past may not feel that they have
a likely threat of litigation. There is good reason for
that. They may not be in a business where litigation or pursuit
of their assets by creditors is likely. Their marriages may be
solid, after many years of married life, so divorce is not a likely
threat.
On the other hand, those conditions may not be true for their
children. What could be worse than to bestow on your children an
outright inheritance just at the time they are involved in litigation
of some kind, or creditors are pursuing them for debt collection or
because of a business reversal? Worse yet, what if they are in
jeopardy of divorce and the divorcing spouse’s attorney sees a juicy
opportunity to take a major share of the inheritance?
While in some states, inheritances can be protected in such cases, does
it make sense to you to flirt with danger? Especially when a
simple amendment or restatement of a living Trust can provide
protection for the assets that might otherwise be exposed to such
perils. Summit Trust Company does not practice law.
However, we do believe that we should recommend that you consult your
estate planning attorney to review your current trust and to consider
all of the possible contingencies.
In the past, we have seen that many living trusts provide dispositive
provisions at the death of the grantors for the assets to go outright
to children or other beneficiaries. Often, there is a formula, if
the beneficiaries might be relatively young at the time of death of the
grantors. For example, if the children are young, than a trust
for them might be established until they are a certain age. That
could be any age where the parents think they might be mature enough to
handle the inheritance.
Some such trusts provide for one-third of the inheritance to be
distributed outright at the age of 25, one-half of the remainder to be
distributed at the age of 30, and the full remainder to be distributed
at the age of 35. This is a very typical arrangement.
But what happens if they are involved in being sued, or if they have a
business reversal, or if they are involved in a divorce, just at the
time they receive a portion or all of their inheritance? Why
would you want to set their inheritance where it could be confiscated
by creditors or divorcing spouses? Why wouldn’t you want to give
them the option to have the assets held in a trust, in such a way that
they could enjoy the full benefits of the assets in the trust, but
under certain circumstances, these same assets could be protected for
their future benefit, and the future benefit of their children.
It happens that Nevada Law is especially helpful in protecting assets,
and so we are quite familiar with the various perils facing anyone who
has accumulated or inherited wealth. However, our suggestion to
reinforce your current living trust with additional protective
provisions are achievable in almost every State in the Union. We
do suggest that you consider some of the Nevada asset protection
features provided by Nevada Laws, so that if you eventually need a
Corporate Trustee, we are anxious to serve you. But let your
attorney advise you on those matters. No matter what, you should
check with your attorney and other professional advisors every few
years in regard to your Living Trust, and especially if there are any
changes in your circumstances, or in the circumstances of your heirs.
George P. Brown
Chief Marketing Officer
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