Yuma Sun: When planning for the future, none of us has a crystal ball. We must plan our affairs based on current circumstances while trying to anticipate a whole range of possible future events.
When a couple sits down to plan what they want to happen after their death, they are trying to anticipate events decades down the road. A couple, each age 50, on average has more than 35 years until the death of the survivor of them. Who 35 years ago could have predicted the way our society would change and how events would occur into the 21st century?
Of course, we must plan, even though few, if any of us, have the ability to predict events in the years to come. We can plan for unforeseen events by giving discretion to those who will be there when those events occur. We choose someone we trust to make those decisions and to come as close as possible to what we would have done if we were there to make the decision. When we leave our assets in a trust, a “trustee” is given the responsibility of managing those assets and carrying out our wishes. The trustee can be given broad discretion, which he or she can exercise in light of the circumstances which we could not have foreseen.
Sophisticated estate planning attorneys even use a concept called a “trust protector” or “special co-trustee” to add even greater flexibility. A trust protector is an unbiased, unrelated person. He or she should not be the normal trustee and should not be one of the beneficiaries of the trust. He or she is given the authority to exercise powers which might cause a problem if the normal trustee exercised them. For example, if a trust owns life insurance on the life of the normal trustee, the insurance might be taxed to the normal trustee’s estate if he or she exercised powers over the policy. This tax problem is avoided by using a trust protector.
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