Legal Blog

The Weekly Scenario: Communication About Trusts

Question: I am creating a trust for my children. Is it beneficial to communicate both the fact that I’m doing this as well as the purpose of the trust with my adult children?

 

Answer:  It is often true that one of the biggest missteps of clients who create trusts is that they do not communicate the purpose(s) with the beneficiaries. Without guidance from the person creating the trust and his or her trusted advisors, beneficiaries can become suspicious that they are being left out of decisions that affect their interests.

A trust beneficiary may become suspicious that the trust is not being administered in her best interests and that the circle of advisors around her needs to be changed up. Moreover, the beneficiary might become disenchanted with the idea of even having a trust and resentful of the idea of having her money ‘tied up’ in trust.

Litigation to resolve these issues is expensive and may not produce the desired result that works for anyone. It can be beneficial to everyone involved if the original purpose of the trust is explained at an early stage — perhaps early enough to avert a crisis in the future.

Comment: To the extent that beneficiaries can be introduced to the independent professionals such as the investment advisors, accountants and attorneys involved, doing so enables the beneficiaries to learn about the objectives of the trust and those who will be looking after their best interests. In many instances doing so will result in less likelihood of a challenge, or even bad feelings, down the road.

As always, if you have any questions or would like to learn more, please contact me at sshane@offitkurman.com or 301-575-0313.

ABOUT STEVE SHANE

Steve Shane Casual SmallSteve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

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