andThe Trustee shall divide the remaining trust property in equal shares among my children, ...
We can spend principal and income on our own health, education, maintenance and support but ultimately our own kids would inherit.Each child shall serve as Trustee of his or her own share. ...
It is intended to be a spendthrift trust:
These provisions include:It is my intent, and a material purpose of the Trust, that the trust principal and income remain my child’s separate property and not a marital asset nor community property, and therefore, not subject to the jurisdiction of any divorce court or proceeding. Additionally, this trust is a spendthrift trust and shall enjoy the full benefits of spendthrift protection from creditors in accordance with the “Spendthrift Trust” provisions of this trust instrument.
reasons include lawsuits, bankruptcy, divorce proceedings, substance abuse, imprisonment, among others.Delay of Distributions
Notwithstanding any other provisions of this Trust concerning distributions to any beneficiary of any Trust created hereunder (except for any Trustor of the Trust), the Trustee of any Trust created hereunder, in the Trustee’s sole discretion, may delay distributions to any beneficiary of the Trust for any of the reasons described in this paragraph. ...
This part is interesting to me.
There is also language that says I don't need to resign if I determine that the financial risk is minimal, even with an unfavorable judgement.Removal of Beneficiary as Trustee
In the event such beneficiary is serving as Trustee during a period in which such conditions or circumstances as are described in the foregoing paragraph of this Section, such beneficiary shall cease to serve as Trustee and shall appoint an independent Trustee that is not related or subordinate to the beneficiary making the appointment, within the meaning of Section 672(c) of the Internal Revenue Code, to serve as Trustee over such beneficiary’s interest in the Trust. Should this spendthrift provision cease to apply to such beneficiary, the independent Trustee shall cease to serve as Trustee, and the beneficiary shall resume his or her role as Trustee over his or her interest in the Trust.
So I am the trustee of this trust and I can make distributions to myself. But if any of these circumstances arise where I would want asset protection, I am no longer trustee, but must appoint another.
I only need to incur the expense of, say, a corporate trustee in the (hopefully unlikely) event that the need arises.
Does this sound like it would be an effective strategy for asset protection?
Wouldn't it be better to say I needn't resign, but only need to appoint a co-Trustee for making distributions? This could be an administrative trustee, rather than a full-service corporate trustee.
I imagine it would be best to have the alternate Trustee already lined up to avoid delays.
We are updating our own plans, so I find this interesting. We will of course discuss with the attorney we meet with.