Trust protectors are becoming an increasingly common part of estate plans in New York as well as the rest of the country. A trust protector refers to someone who is appointed to look over a trust and make sure that the trust is not adversely affected by changes in the law.
Appointing a trust protector is not a decision that benefits everyone. As a result, this article reviews some of the biggest advantages that people realize throughout appointing a trust protector.
# 1 – Make Changes to a Trust without Formal Amendments
Due to the broad powers that can be assigned to trust protectors, it is possible for trust protectors indirectly modify trust terms without formally altering the terms of a trust document. While not often the case, some types of trust decisions will still require modification.
# 2 – Correcting Overlooked Issues
Most people understand that they should be as detailed as possible when estate planning because this avoids leaving uncertainties down the road. This often includes situations that change so substantially that a trust no longer can effectively serve a person’s estate planning goals.
# 3 – Making Sure Legal and Tax Advantages Are Realized
Changes in both state and federal law have the potential to greatly impact the outcome of how a trust is administered. If these changes impact your trust or if changes in the law create new possibilities for tax advantages, you can create the power in a trust protector to modify the terms of a trust to meet these new regulations so the advantages are still realized.
If it is not important to you to take advantage of either of these issues, a trust protector might not be necessary.
# 4 – Modifying a Trust after Your Death
A substantial advantage of appointing a trust protector is that a trust protector can alter the terms of a trust even after your death. Provided that a trust protector has clear instructions about your estate planning goals, the trust protectors are permitted to make critical decisions so your trust continues to satisfy your goals.
While some people might gain comfort in knowing that a trust protector can help achieve your goals, other people might feel uncomfortable in giving a trust protector this type of power.
# 5 – Oversight of a Trustee
Trust protectors can be assigned the ability to monitor the activity of a trustee. Based on the nature of a trust, a trust protector can be given the ability to approve investment decisions, approve discretionary distributions, appoint additional trustees, and to even remove a current trustee.
Some people find this helpful because it avoids having a trustee improperly manage or waste trust assets. This might not seem like much of an advantage if you have selected a trustee who is dependable and who will likely carry out their duties.
Contact an Experienced Estate Planning Lawyer
If you need help deciding whether a trust protector would be a valuable addition to your estate plan, you should speak with a knowledgeable attorney at Ettinger Estate Planning. Contact us today to schedule a free initial consultation.