Variations to Typical Trust Agreements
In most cases, a living trust terminates upon the death of the
grantor and its assets are distributed to his or her children.
This is not always the case, however, and it is possible for
the trust to continue throughout the lifetime of the grantor's
children and go to their children when the grantor's children
die. That is, the trust goes to the grandchildren of the person
who established the trust, when that person and his or her children
die.
Alternatively, when the grantor dies, part of the trust can
be removed and the proceeds distributed as an educational trust
for the grandchildren while the remaining assets continue in
the trust. The variations of a living trust are numerous and
are dictated by the wishes of its creator who sets them forth
in the trust document.
When a living trust is established, much thought must be
given to contingencies and written into its framework because
the trust cannot be changed if the trustee becomes incapacitated
and the named successor has also died or become incapacitated.
Although the trust is revocable, it can only be changed by
the trustee and not by the successor trustee or anyone else
after the grantor's death or incapacity.
If the successor trustee, or anyone designated to receive
the trust's assets, dies before the single individual who
created the trust, contingencies need to be provided for and
stipulated in the trust agreement. Failure to do so can result
in lengthy and costly court proceedings, during which time
the trust cannot be effectively managed or distributed.
The individual who creates the trust must carefully consider
who to name as trustees, as well as those designated as beneficiaries
to receive the trust. The grantor is usually the original trustee,
and when he or she dies or becomes incapacitated, administration
of the trust falls to the successor named in the trust. This
is most often one or more of the children. If this named successor
trustee has died or become incapacitated, it is beneficial to
name multiple successor beneficiaries, who would serve in succession.
The longer the trust is designed to continue, the more thought
must go into deciding who will act as trustee. If a trust is
created to extend through the life of its creator as well as
that person's children, successor trustees must be carefully
considered. In this case, with the trust continuing for upwards
of fifty years, all possibilities must be carefully planned
for. If none of the trustees named in the agreement can function
as trustee, a commercial trustee can be named as a default trustee,
or the probate court can be petitioned to name a replacement
trustee. |
