Is a Senior Trust for You?

By Verena Meiser



Revocable trusts are continually being marketed as great tools to manage your assets, should you become disabled.

However, when your mental capacities begin to decline, how do you protect yourself from the unscrupulous relative who may pressure you into changing your distribution provisions or into making gifts of trust property?

Your power to revoke and amend your trust gives you the sense that you have control over your assets - yet it is this power that may backfire.

What might you do to protect yourself? The answer is to convert your revocable trust into a senior trust with protective mechanisms that set your mind at ease.

A senior trust is a revocable trust that becomes irrevocable and limits your powers over trust property upon the occurrence of an event that might render you incapable of resisting undue influence. Such a triggering event could, for example, be the time after your spouse dies or becomes disabled or, perhaps, your own disability.

You may define your own list of triggering events, depending on your circumstances. As soon as such an event occurs, your powers over your trust property become limited, because when your powers are limited, your opportunistic relative cannot force you to make a distribution or to amend your trust.

A senior trust limits your power by requiring that a special trustee sign off on any distribution from the trust. In effect, your special trustee gets complete discretion regarding income and principal distributions to you. Thus, for example, if you wish to make a gift of trust property to someone, your special trustee should assess whether you would have made such a gift under less stressful circumstances.

The better your special trustee knows you and your relationships with members of your family, the better your special trustee can evaluate your wishes and protect your interests. Identify someone for this role whom you trust and who is not a beneficiary of your trust. This person can monitor your capability and judgment and work with you during times when you appear capable of making distribution requests, while having the power to override your wishes and act contrary to your requests whenever your requests appear unreasonable or suspect to the special trustee.

If you already have a revocable trust, you can amend it to transform it into a senior trust. An estate planning attorney who is familiar with this type of trust can draft the necessary amendments such that you avoid undesirable tax consequences when your trust becomes irrevocable.



Verena Meiser is an associate at the law firm of Davis, Agnor, Rapaport & Skalny in Columbia. She can be reached at 410-995-5800 and vmeiser@darslaw.com.