What I Hate About Living Trusts

What I Hate About Living Trusts

In the 2006 comedy film, Failure to Launch, Matthew McConaughey plays a 35-year-old bachelor still living at home with his parents who eventually hire an “interventionist” to help him “launch.” However, often in real life, the Failure to Launch child never quite gets around to achieving personal or financial independence, remaining in the parents’ home well into adulthood, or living nearby as subjects of “economic outpatient care” from mom and dad. Incidentally, having remained a constant fixture in the life of his or her parents, the Failure to Launch child ends up being named as successor trustee of the family living trust!

A living trust is the form in which many families today organize their estate. The person you designate as your successor trustee has considerable responsibilities, holding the highest civil duty and standard of care recognized by law – the fiduciary duty. “Not honesty alone, but the punctilio of an honor the most sensitive” is how Judge Benjamin Cardozzo famously described this responsibility. In light of this duty, your successor trustee should be someone you can trust, and who is capable of managing your trust responsibly.

Often times, the Failure to Launch child feels entitled to the lion’s share of the estate because he remained close to the parents, never forming a family of his own. Complicating things, the Failure to Launch child may be the family’s first born, giving rise to a ‘primogeniture’ complex – the first in line to inherit the entirety of the estate and magnanimously care for the younger siblings as he sees fit.

Parents set up a living trust to avoid probate. Yet under this scenario, the child with the least amount of financial acumen-the child who is accustomed to being the primary object of his parents’ financial affection-is left in charge. Ironically, the estate then becomes the subject of a contested probate action, more protracted and costly than it ever would have been had the parents not bothered to formalize an estate plan in the first place.

Trust litigation has exploded in volume in recent years. The new world estate planning attorney helps clients plan their estate by drawing on lessons learned in court. Unfortunately, estate planning is procrastinated and living trusts are downloaded off the internet as if one size fits all. Perhaps worst of all, too many times the successor trustee is the child who was closest to the parents as a result of being least responsible among his siblings-a Failure to Launch. Therefore, careful, qualitative planning and the assistance of a legal advisor, with strong credentials, are highly recommended.

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