Clients of quality estate planning attorneys often ask: Why is the trust you prepared for me so long? A trust, or any legal document, is only as good as the certainty of the outcome it produces. A trust of only a few pages may be easier to read through, but it cannot address all the potential issues that may arise. It would be like being a mechanic and only bringing a hammer and a screwdriver. What if you need a wrench? What about a saw? A trust that omits clarifying language removes those tools from your toolbox. You cannot be certain what issues might arise, a trust that covers issues that might arise is like carrying a spare tire or having auto insurance. Even if you never need it, it’s still smart to have it because the inconvenience of having it and not needing it is small compared to the havoc of needing it and not having it.
For example, a substantial portion of a trust details the powers and duties of the trustee, the person who manages the trust assets. Typically, state law does provide a set list of powers of the trustee that are default. However, these powers do not specify all possible things you may want a trustee to do. Do you want the trustee to be able to mortgage the house to pay for medical care for you or your children? The mortgage company may have a concern that the trustee does not have this power unless it is clearly stated in the trust. Do you want the trustee to be able to follow the recommendations of your investment advisor and buy a mutual fund, options, or some other investment vehicle? The brokerage firm may have a concern that the trustee does not have this power unless the trust language clearly allows it.
Another example is a lack of clarity regarding the beneficiaries. A common misconception is that if you say you want your assets to go to John, Mary, and Susan, that resolves the matter. But, a host of issues have been left open, giving rise to a host of potential friction points among descendants. What happens if John dies before you? Does his share go to his descendants or to Mary and Susan? Should John’s descendants share his portion or get an equal share with Mary and Susan? What if some of John’s children were adopted by him, should they get a share the same as if they were his biological children? A 2004 case in Virginia, McGehee v. Edwards, determined that a trust set up for the person’s descendants did not include those who were adopted if the trust provided nothing further. Clarity in the trust document would have solved this issue and obviated the necessity of contentious, costly litigation.
There are countless other issues that a good trust document addresses. While these clarifications lengthen the document, they make it more likely that your wishes will be carried out without difficulty. This defuses fights among beneficiaries and helps ensure that the rest of the world respects your wishes. While the simplicity of a trust of only a few pages is enticing, it provides a false simplicity. An attorney focusing on estate planning can help you by preparing a trust that ensures that your wishes will get the respect they deserve.
Mr. Ronald “Chip” Morrison, Jr. is a Board Certified Specialist in Estate Planning and Administration by the Louisiana Board of Legal Specialization and a member of the American Academy of Estate Planning Attorneys. He has been engaged in Louisiana trusts and estate law for the last 16 years. For more information or to attend an upcoming seminar, please call our Metairie office at (504) 831-2348 or contact us through our website.
- Don’t be a Turkey – Use Your Annual Per Donee Exclusion Amount - November 24, 2022
- Split Things Fairly – Not Exactly - November 21, 2022
- How to Leave Behind a Lasting Legacy for Your Loved Ones - November 18, 2022