Many engage the services of an estate planner to reduce tax liability or seek protection from creditors. In continuance of my discussion found in the previous blog, “One Word Could Make All the Difference”, the ambiguity of a word or phrase can remove the very protections one pursues through estate planning. Take for instance a trust. Many planners use trusts to shelter assets from creditors of those inheriting them. However, the inclusion or absence of a term in creating the trust could damage the goal of protection. A common example would be a trust created for the health, education, maintenance, or support of a beneficiary.
The court in In re Estate of Skaff noted that by simply providing the trustee with discretion to make disbursements, the creditor cannot compel distribution. One word, discretion, meant that “the beneficiary has no ascertainable interest in the trust’s assets.” (In re Estate of Skaff, 2011 Mich. App. LEXIS 10). In other words, it is at the total discretion of the trustee to make distributions and therefore, the beneficiary has no interest until funds are actually distributed.
In re Estate of Skaff is just another case in a long line of examples where one word, phrase, or interpretation can make all the difference in how assets are distributed. Proper estate planning must be given necessary time and attention. Failure to do so can result in documents that, when interpreted upon your death, do not accomplish the goals intended.
– Adam Abramowitz, J.D. and Gary Altman, Esq.