Trusts are a part of many estate plans in Washington DC. These trusts are often set up with specific provisions regarding changes that can be made to them, without the need for an amendment to the trust. However, grantors may want to use caution with regard to just how much change can be made to a trust. Sometimes, a grant of total authority could lead to the potential for abuse.
For example, grantors are cautioned to be particular when it comes to using the power of appointment. This power gives an individual the right to amend the trust as well as to add and remove assets from the trust. If that person is not worthy of that kind of faith, it can easily be abused.
Provisions can be included in the trust documents to automatically change the party with whom the power of appointment rests. For instance, many trusts have a clause regarding divorce. If the parties divorce, the ex-spouse may be automatically removed from the trust as a trustee, beneficiary and someone with the power of appointment. This is most often done to protect children who are beneficiaries of the trust.
Washington, DC residents may hesitate to consider that someone they trust could potentially betray that trust. However, when it comes to money, people sometimes act in ways that may seem out of character. For this reason, those creating trusts benefit from having built-in safeguards to protect not only the beneficiaries of the trust, but its assets as well. Once the contingencies are included in the document, the grantor no longer has to worried about those eventualities. In fact, many of them are standard in properly drafted trusts.
Source: investmentnews.com, A little flexibility goes a long way with trusts, Darla Mercado, Nov. 22, 2013