Include Language to Modify Your Trust in Case of a Future Accident
If there is one thing in life we can all understand, it is that nobody knows what will happen in the future. Understanding this uncertainty, however, does not mean we should not plan for it.
When it comes to planning for a loved one with special needs, or anyone else, it is particularly important to include language in an estate plan that will allow some flexibility for future events, like a catastrophic accident. While that may seem obvious, there is a lot more to it than you might think. For example, a Special Needs Trust is one of the best ways to secure long-term stability for a family member with special needs. These trusts allow for assets to be held in trust for the benefit of a special needs person, without compromising their ability to qualify for essential public assistance programs that have low income requirements.
Similar to a regular trust, a Special Needs Trust can either be revocable or irrevocable. There are benefits to each, depending on your specific situation. Simply put, revocable trusts can be changed at any time, but irrevocable trusts generally cannot be changed, unless you plan for it and work with your estate planning attorney on specific scenarios.
Typically, once you place assets in an irrevocable trust they will remain there solely for the benefit of the trust’s beneficiary. An important advantage is that creditors will not be able to touch irrevocable trust assets. By adding language that allows for a designated Trust Protector, or a trustee, to exercise decanting power, you can be adding the critical flexibility needed to contend with unforeseen future events.
A Trust Protector can be any independent third party who has been granted the power to change an irrevocable trust, which is a power the person making the trust and the trust’s beneficiaries do not have. A Trust Protector can amend a trust during a period of the trustmaker’s disability or even after their death. The key is that they cannot do anything inconsistent with the original intent of the trust.
A second option would be to allow the trustee to decant the trust, that means pouring the assets into a second trust with updated language. It is not as ideal, but it can be effective. Again, the intent of the original trustmaker cannot be compromised.
Adding this type of language to modify your trust can allow your estate plan to adapt to future changes in the law, in your family, or those unexpected changes brought on by catastrophic events. This is a tool for you to discuss with your estate planning attorney to determine the best way to reflect your goals in your estate planning. If this article raises more questions than it answers this Special Needs Law Month, we encourage you to contact our office to ask us.