You are Named the Trustee of the Trust
An inheritance trust created by your parents can benefit you during your life time and can be divided into more trusts for your children after your death. When your parents create an inheritance trust with the help of an estate planning attorney, it is important that they name you trustee (if you are supposed to get the inheritance). In addition, they must also assign co-trustees so that they can manage things if anything happens to you. Things would get complicated if your parents fail to name you trustee or assign co-trustees.
You Have the Right to Decide How the Assets Will Be Distributed Upon Your Death
Check the inheritance trust to see if it provides you with the ‘testamentary power of appointment’. This gives you the authority to decide how the assets will be distributed upon your death. You can pass all the assets to your descendants or you can choose to give some of them to a charitable organization or any other individual.
You Receive “Lifetime Power of Appointment”
Make sure that the inheritance trust created by your parents provides you with ‘lifetime power of appointment. With this authority, you will be able to give assets to your children as well as other descendants in your lifetime. If you parents haven’t given you this power, discuss it with them and have the trust revised with the help of an estate planning attorney.Appointment of Trust Protectors
In an inheritance trust created by your parents, trusts protectors should be appointed. These are different from the trust’s beneficiaries. They are allowed to change the terms of the trust and can do this if family circumstances or state law changes significantly. Changes in the trust may be made only to benefit the beneficiaries. Trust protectors can alter the trusteeship and the trust’s dispositive terms.An Irrevocable Trust is Created
The parents of a lot of people think that creating inheritance trust is a very hard and complex process. Moreover, sometimes estate planning lawyers who are helping these parents aren’t well-versed in all aspects of estate planning. If you are one of those people whose parents fit the bill, it is best that you talk to your estate planning attorney to have them draft an irrevocable trust that you will sign. This trust will then be made the beneficiary of the plan by your parents. In the irrevocable trust, there will be provisions that will benefit your children and will apply on your death if you don’t exercise your power of appointment. Once your sign an inheritance trust covering everything you want, your parents will only have to make some changes to their trust or will so that it states that your inheritance will pass to the irrevocable trust instead of you directly.
By following the checklist we have provided above, you will be able to ensure that the inheritance trust created by your parents is free from errors that could create problems for you after your parents are gone. If anything in the inheritance trust doesn’t make sense, discuss it with your estate planning attorney. They should be able to guide you and advise you on the right course of action.
