Estate Planning and Happily Ever After
Compliments of Sterling & Tucker, LLP,
Written By: The American Academy of Estate Planning Attorneys
You may have overheard a former classmate at a high school reunion say, “You haven’t changed a bit!” But if you really want to see how much you’ve changed, just take a look through your high school yearbooks. Odds are, any mention of the future from those who signed your yearbook during that rite of passage were probably made by 18 year olds who, like their classmates, saw only the magic and freedom adulthood brings. No one anticipates the ebbs and flows, losses, heartbreak or disappointments that sometimes pepper the proverbial “happily ever after.” It’s not until we’ve lived through a few of those adult years that we can look back and realize all of the experiences–good and bad–have resulted in a well-lived life. The question then becomes: how do I plan for my final years? No one ever said you had to accurately predict the future, but you can put strong protective mechanisms in place as you plan for the future.
One of the more important decisions to be made is who to trust to make decisions when you are no longer able to do so. For example, a trustee can manage different assets while also ensuring that your wishes are being met. There’s always flexibility in how much discretion this person may be given; ultimately, it should be based on what makes you comfortable. Sophisticated estate planning concepts can be put into place for even more flexibility. A “special co-trustee” or “Trust protector” can be added to your estate plan. A special co-trustee is an unbiased and unrelated person. Keep in mind this is someone other than the normal trustee. He or she is given the authority to exercise powers which might cause a problem if the normal trustee exercised them.
Another benefit of having a special co-trustee is that he or she may be given authority to amend the Trust, should unforeseen circumstances come to light. Most revocable living Trusts for married couples use a “Family Trust” or “Credit Shelter Trust,” which allow for the estate tax exclusion after the first spouse passes away. If there is no estate tax, these tools are usually not necessary. At that time, the special co-trustee has the authority to terminate these dynamics and distribute the proceeds to the surviving spouse.
Many young parents are seeing the advantages of early estate planning, even though they’re unsure of what their family’s future needs may be. The flexibility of having a special co-trustee means adjustments can be made later. For instance, there may be a child with disabilities and with unique needs. Or, one child may find financial success in her career as an adult, and as a result, her siblings may benefit more than her from the financial assets in your estate plan. It can also mean the assets you’ve worked hard to acquire aren’t lost to a child’s spouse during a divorce. It’s a way to level the playing field, so to speak.
Just as the case was when you graduated high school and college, you couldn’t predict the path your life would take. What you can do, however, is define a strong estate plan that can help pave the way to that well-lived life that everyone wants for themselves and their families. Your estate planning attorney is where it all begins.