trust checklist

8/11/2019 Trust Checklist

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Pour-Over Will

If a revocable living trust is used to implement the clients estate plan then apour-over will is used in conjunction therewith. One of the purposes of the

pour-over Will is to direct that all assets that were not titled in the name ofthe trustee of the living trust ultimately become part of the trust and aredisposed of pursuant to the terms of the trust.

Checlist P-OW !

"elect guardians and successor guardians for any minor

children

"elect e#ecutors and successor e#ecutors.

$isinherit any parties% such as children and spouses.

$ispose of interests in retirement plans and individualretirement plans.

&ae specific be'uests% usually of items of personal property

that are not ordinarily transferred to trust.

Checlist P-OW (

)angible Personal Property* personal effects usually flow to

surviving spouse.

Items such as* jewelry% clothing% household furniture% personal

automobiles% boos% paintings% wors of art are not transferredto trust.

+ift all your disposable interests in all plans of deferred

compensation, this gift includes all individual retirementaccounts. If spouse disclaims for any unforeseencircumstances then items are placed in a $isclaimer )rustcreated under the terms of the )rust.

Provision of disinheritance may prove useful.

/o contest clause often prevents controversies among heirs.

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b. Where the surviving spouse is in need of protection% becausethe trust can 'ualify as an asset protection trust.

When using a :)IP trust% we should ma#imi6e generationsipping transfer ta# planning options and consider granting alimited power of appointment to the surviving spouse%e#ercisable only at death.

:ualified $omestic :$O) )rust. If the settlors spouse is not

a ;.". citi6en% a :$O) trust should be used to eliminate estateta# e#posure.


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family are deceased. )he beneficiary is often a charity ordistant relatives% such as nephews and nieces.

Checlist 01)-2(* "electing )rustees and "uccessor )rustees.

)he )rustees and successor trustees are important for many reasons%including% without limitation% the persons so designated will managethe settlors property if they are unable to do so by reason of disabilityor otherwise. 3urther% in order for an asset protection trust to beeffective% the beneficiary cannot act as sole trustee.

Where only unrelated trustees act% consider re'uiring at least

two unrelated successor trustee in order to minimi6e financialimpropriety.

Consider each of the following factors in evaluating potential

trustees*a. Cost. Often institutional trustees provide secure

management of assets% but only at a significant cost.b. )he management sills of the person.c. )he investment nowledge and sill of the person. )he

following 'uestions% in this regard% should be ased*i. "hould an investment advisor be named in the trust>ii. "hould someone be named who will recommend

an investment advisor>

iii. "hould the trustee tae into account the investmentprofile>

d. Whether the liely beneficiaries will interact well with thetrustee.

e. )he relationship of co-trustees if applicable. $o the co-trustees now each other> If so% is their relationship suchthat the potential for financial misconduct is present>

In order for the bypass trust and the marital trust to be asset

protected trusts% never allow the surviving settlor to act as soletrustee and always have a co-trustee.

/ever allow a beneficiary of a trust that is intended to 'ualify

as an asset protected trust to act as sole trustee, always appointa co-trustee.

Consider whether it is necessary to re'uire a bond> It is often

unnecessary and usually e#pensive.

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9llow trustees to be changed in order to add fle#ibility and

avoid long term conflicts.

$ecide whether the trust can hold stoc of publicly traded

companies>

Checlist 01)-2=* 3unding the )rust

1ist all property funding the trust.

Chec the title to each item of property to see whether it is held

as separate property% community property% co-tenancy% or jointtenancy.

1ist all assets transferred and transferable to trust.

$etermine which assets need not be transferred to trust to avoid

probate for e#ample% retirement plans or insurance policies

would be included in the pour-over will.

Checlist 01)-2?* $rafting Considerations

!. $ivision of )rusts $uring "ettlors 1ife.

Intra-spousal gifts should be retained in trust in order to

minimi6e the lielihood that a resulting trust will be imposed onthat property.

(. Character of Property $efine the property rights of each party.

9ll provisions of the trust should be consistent with any marital

agreements-for e#ample% during joint lifetimes% separateproperty trusts can be amended only by the spouse whoseseparate property is held by that trust.

=. &arital )rust

:ualifying for the &arital $eduction. )here are various ways

to 'ualify for the marital deduction. )he ways in whichinterests can 'ualify for the marital deduction and the assetprotection implications of each are as follows*a. :)IP )rust% which can be an asset protected trust% e#cept as

to income actually distributed.

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b. 9 trust that gives the surviving spouse all income and ageneral power of appointment% which generally is not asset

protected.c. Purchasing a life annuity% which can be asset protected.

$isposition of 9ssets. $isposition on death of surviving spouse

can be*a. Pursuant to a power of appointment% which

should be limited for asset protection purposes.b. Pursuant to the direction of the first decease

spouse where the marital trust is a :)IP trust.?.


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&a#imi6e allocation of e#penses to the bypass trust in order to

ma#imi6e the amount that can be allocated to that trust. 9nallocation of e#penses to the marital trust would effectivelyreduce the amount of the marital deduction.

"uch ta#es and e#penses on the death of the surviving spouseare allocated to the portion of the trust estate that is subject toestate ta#% namely% the survivors property and the maritaldeduction trust.

A. )a# Compliance

"ince the trust is revocable% all income is ta#ed to the settlor.

9 separate ta# return for the trust is not re'uired where the

grantors act as trustee.

"imilarily% I0" 3orm @8 is not re'uired under those conditions.

Checlist 01)-2@* $rafting the 1etter of $isclosure of )erms of )rust

!. )rustees

Berify the identity of the successor trustees and co-trustees.

/ote that successor trustees have power to manage trust assets

during disability.

If two trustees have not been appointed% then note that this

increases the lielihood of financial irresponsibility.

(. "ettlors Power.=. $isposition of )rust 4state. $isposition of trust assets upon the

death of the "ettlor.

?. 9sset Protection 9spects of )rusts Created on $eath of a "ettlor.


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