Financial Resource

Grantor.  The grantor is the creator of the trust and the person who is eligible to make gifts to the trust. You may serve as the grantor of your own trust, or you may 
ask a parent or another relative to establish the trust for your benefit.
Trustees.  The trustees control the trust and make decisions about investments and distributions. The trustees have a duty to follow the instructions in the trust or they 
can be held personally liable for breach of their duty to the beneficiaries. You may choose one or more trustees and you may give them equal powers or you may divide 
the powers and responsibilities of the trustee as you see fit. The grantor cannot serve as a trustee, but it is possible for a beneficiary to serve as a trustee. The 
trust document should name the successor trustees if the original trustees should cease or fail to serve, or it should include a formula for electing the successor 
trustees.
Beneficiaries. The beneficiaries are the people who are eligible to receive benefits from the trust. You can name as many potential beneficiaries as you wish. You can define 
their rights in any manner, but it is usually best for asset protection purposes to limit the rights of the beneficiaries and give the trustees the discretion to 
determine how much or how little to give to the beneficiaries.
Trust Protector.  The trust protector is an independent person with special powers to watch over the trustees and ensure that the trust accomplishes its intended purposes. You 
may give the trust protector the power to remove and replace the trustees, to terminate the trust, to amend the trust to adapt to changes in the law, to divide the 
trust in the event of divorce, to eliminate a beneficiary from the trust, to add beneficiaries to the trust, and to exercise these powers with or without the consent 
of the grantor, the trustees, or the beneficiaries.
Governing Law. You can generally choose the law that will govern your trust by designating the governing law in the trust instrument and by choosing a trustee located in the 
jurisdiction where you want the trust to be governed. Offshore trusts can provide excellent protection, but they tend to have a negative image that can do more harm 
than good. There is a vast difference in the laws of the different states and it is critically important to choose a jurisdiction whose laws are best suited to 
accomplish your purposes. For example, in many states, the ex-spouses of a beneficiary have a claim on the assets of the trust for alimony, support, and even property 
division in the event of a divorce. Other states specifically provide that a beneficial interest in a trust is not a property right and that distributions may be made 
in the “absolute” discretion of the trustee.
Distributions During Life.  I generally recommend that you leave the distribution schedule flexible during your life and allow the trustees discretion to make distributions among a large 
pool of potential beneficiaries at such times and in such amounts as they determine.Distributions After Your Death. Most clients leave specific instructions for the division and distribution of assets after their death. I generally suggest that you give the trustees 
discretion to continue the trust after your death, in order to protect your spouse and children from a remarriage, divorce, bankruptcy, or other unexpected liability. 
You can limit the rights of the beneficiaries in order to protect them from themselves, or you can give them the power to serve as their own trustee and distribute the 
assets to themselves as they wish.
Powers of Appointment. A power of appointment is a power given to any person to change or “re-write” the requirements of the trust. You can give the beneficiaries or others broad 
powers to make changes, or you can give them limited powers to make changes within a certain group of beneficiaries. For example, you may give your spouse the power to 
make changes among your children after your death, but not the power to give all the assets to a new spouse.
Income Tax Treatment. You may design your trust so that its income is taxable to you, to the beneficiaries, or to the trust itself. These are important decisions that should be 
made with the help of a qualified tax attorney. You may also design the trust with enough flexibility so that the income tax treatment can be changed from time to 
time. You may choose to have the trust income taxable to yourself for a time so the assets of the trust can grow tax free. This “tax burn” technique is a powerful tool 
for the elimination of estate taxes.

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