The Tax Cut and Jobs Act of December 2017 offered a number of advantages to individuals who are interested in estate planning. This new law, however, is not without its limitations. For example, many of the provisions included in the act will expire in 2025. As a result, it is critical to consult with an estate planning attorney to ensure that your planning techniques will carry you through. One helpful technique is to make sure to include provisions in trusts that make them flexible and capable of adapting to changes in your life circumstances as well as the law. The following will review some of the most helpful strategies that can be used to make trusts flexible.
The decanting process involves moving assets from an old trust into a new one that better reflects current circumstances or which contains more advantageous terms. It is even possible to use the decanting process to alter irrevocable trusts, which generally are not capable of being altered.
While many states have laws allowing the decanting process, Oklahoma currently does not. Even though it is currently not possible to decant a trust in Oklahoma, if your estate will likely be administered elsewhere, it is a good idea to consider the possibility of authorizing the decanting process.
There has been an increasing trend throughout the country to create trusts that are fully discretionary, which means that the beneficiaries of the trust must wait for the trustee to exercise distribution powers before receiving anything.
Including a discretionary trust provision is helpful when there is a risk that a beneficiary will withdraw assets from a trust in a wasteful manner. By naming someone on whom you can count as a trustee, you can make sure that assets are distributed to your beneficiaries at the best possible time.
In addition to the two previously mentioned tips, another strategy that is commonly used to add flexibility to trusts are clauses that establish trust protectors, who are individuals who have powers over the trust but who are not trustees.
When trusts are likely to exist for an extended period of time and at risk of changing circumstances, it is often wise to consider naming a trust protector. The advantage of trust protectors is that they are capable of resolving obstacles that were not anticipated at the time the trust was created.
Some of the powers that trust protectors are often granted include the ability to change administrative provisions, change beneficiaries, remove trustees, and veto investment decisions.
Oklahoma statute 60 O.S. 175.3(M) defines the role of “trustee advisor” to provide advice to trustees, but unless a trust document states otherwise, this is only an advisory role. Oklahoma law, however, does mention trust protectors in the role of special needs trusts.
Speak with an Experienced Estate Planning Lawyer
There are a number of nuances to successful estate planning. Adding flexibility to trusts is one of the best ways to respond to changing circumstances in things like family relationships, finances, and new regulations.
Fortunately, an experienced estate planning lawyer can help. Contact attorney Jim A Lyon today to schedule a free initial consultation.