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estate planning
Financial turmoil impacts living trusts
17/09/08 11:57
Time to Review Your Estate Plan
by Derek G. Rowley (c) 2008. All rights reserved.
LAS VEGAS - For years, legal practitioners and estate planners have advised clients to carefully think through the appointment of successor trustees named in living trusts. That advice has never been more relevant than now, as financial titans on Wall Street and elsewhere reel from the impact of our latest financial crisis. In light of the financial meltdown, now is a good time for you to review your trust and estate planning documents to look for potential problems.
In the typical living trust, the individual creating the trust becomes the trustee and the beneficiary. Then, in the event of death or disability, successor trustees are typically named, frequently the spouse or other family member. However, the traditional “catch-all” has been to name an additional successor trustee that is thought to be guaranteed to outlive any individual by naming a prominent national or regional bank as a corporate trustee. The reason for this is that the existence of a corporate trustee will ensure that the provisions of the trust will be carried out by someone with professional fiduciary responsibility.
Today, however, that strategy may need to be re-evaluated as some of the biggest names on Wall Street and other regional and local banks are shut down, seized by regulators and their assets sold. This can result in an unanticipated change in the actual corporate trustee, often resulting in long-distance frustration for future beneficiaries.
It is important to note that the trust assets held by a corporate trustee are not counted as property of the trustee, so they will not be directly impacted by the failure or bankruptcy of a corporate trustee. Nevertheless, the trust assets can be seriously impacted my market conditions, without any clear path for how trust assets should be invested to weather financial storms.
While there may be no clear solution to these challenges, those who are aware of these potential problems may avoid serious future problems by reviewing how their living trust addresses these issues, if they are addressed at all. That, and a bit of common-sense can go a long way towards avoiding problems. Fortunately, the beauty of the living trust is that it is revocable, allowing the individual who created the trust to make any necessary changes in the trust as long as they live. So, if you find a potential problem, you still have time to fix it.
by Derek G. Rowley (c) 2008. All rights reserved.
LAS VEGAS - For years, legal practitioners and estate planners have advised clients to carefully think through the appointment of successor trustees named in living trusts. That advice has never been more relevant than now, as financial titans on Wall Street and elsewhere reel from the impact of our latest financial crisis. In light of the financial meltdown, now is a good time for you to review your trust and estate planning documents to look for potential problems.
In the typical living trust, the individual creating the trust becomes the trustee and the beneficiary. Then, in the event of death or disability, successor trustees are typically named, frequently the spouse or other family member. However, the traditional “catch-all” has been to name an additional successor trustee that is thought to be guaranteed to outlive any individual by naming a prominent national or regional bank as a corporate trustee. The reason for this is that the existence of a corporate trustee will ensure that the provisions of the trust will be carried out by someone with professional fiduciary responsibility.
Today, however, that strategy may need to be re-evaluated as some of the biggest names on Wall Street and other regional and local banks are shut down, seized by regulators and their assets sold. This can result in an unanticipated change in the actual corporate trustee, often resulting in long-distance frustration for future beneficiaries.
It is important to note that the trust assets held by a corporate trustee are not counted as property of the trustee, so they will not be directly impacted by the failure or bankruptcy of a corporate trustee. Nevertheless, the trust assets can be seriously impacted my market conditions, without any clear path for how trust assets should be invested to weather financial storms.
While there may be no clear solution to these challenges, those who are aware of these potential problems may avoid serious future problems by reviewing how their living trust addresses these issues, if they are addressed at all. That, and a bit of common-sense can go a long way towards avoiding problems. Fortunately, the beauty of the living trust is that it is revocable, allowing the individual who created the trust to make any necessary changes in the trust as long as they live. So, if you find a potential problem, you still have time to fix it.
Why Everyone Needs a Living Trust
19/08/08 22:34
John and Mary owned a successful small business for 15 years until John suddenly died
of a heart attack. Mary did not want to run the business alone, so decided to sell it.
Read More...
of a heart attack. Mary did not want to run the business alone, so decided to sell it.
Read More...