How to Bypass Problems Lawyers Create Crafting Trusts

Commentary on Barron’s article by Richard Nalley

Trust lawyers mean well but can create headaches for everyone because, well, they’re not “normal, logical, or rational human beings,” Benjamin Pruett, a principal and fiduciary counsel at Bessemer Trust, tells Barron’s.

Ask the Right Questions and Be Flexible

A little preparation can help, the publication writes.

First off, it’s important to “plan upstream,” according to Barron’s. John Bergner, a partner at the law firm Winstead, says it’s key to ask trust clients about anything being left to them that could be exposed to a hefty IRS tax, creditors or divorce.

It’s also essential to know all pieces of the puzzle, Bruce Stone, a partner at Goldman, Felcoski & Stone, tells the publication.

If there’s a difference between the will and the trust — say, money being left to both children in one but only one of them in the other — it may end up in court, to disastrous outcome, he tells the publication.

Pruett, meanwhile, says it’s dangerous to assume that all the children will agree on what to do with the trusts, especially when spouses get involved. “It’s like cats in a burlap sack,” Pruett tells Barron’s.

He also warns against mandatory termination dates, which can leave trusts exposed to creditors and taxes, the publication writes. Pruett suggests making the trust more flexible, according to Barron’s.

And Read Moore, a partner at McDermott, Will & Emery, tells the publication that clients need to be aware of decanting statutes, which in some states means that “outdated” trusts can be rewritten.

To avoid any unpleasant surprises, he says, trust lawyers need to inform the client so that they can find a state where decanting isn’t applicable if they want the assurance that the trust won’t be changed, Barron’s writes.

Source: Barron’s

Posted by: The Trust Advisor



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