For my continuing legal education (CLE), I attended recently the 2023 University of Miami Heckerling Institute on Estate Planning. It is always a great week of very informative presentations. [I am the ultimate nerd who attends every presentation and who writes notes throughout every presentation. Although I generally do not refer again to the notes, the note-taking process helps burn numerous points into mind.]
One of the key presentation points at Heckerling that continues to resound more loudly each year is the notion of how — in some cases essentially easily — one now can change or rewrite an otherwise existing irrevocable trust by decanting, or distributions in further trust, non-judicial settlement agreements, etc. In my view, the idea of an irrevocable trust substantively no longer has powerful relevance. By contrast, in my first year of law practice many years ago, following my first meeting then in which our client signed an “irrevocable” trust document, I felt as though that document had at that moment become carved in stone.
Bottom line. And consistent with a recommendation from one of the Heckerling speakers, you should consider including a provision in your trust document that helps protect against eliminating beneficiaries as a result of a decanting, non-judicial settlement agreement, etc., such as my own sample language below:
Except as to an exercise of the powers of appointment under Article XX of this trust agreement, no statutory powers in any jurisdiction, including but not limited to decanting or by non-judicial settlement agreement, nor by operation of any other provisions included hereinafter, may be exercised in any manner with the result of removing or eliminating any individual’s beneficial interest under this trust agreement, whether or not such interest is at such time vested or contingent.
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