Generally speaking, a revocable trust is one that its creator can modify or revoke at will. The revocable trust is popular because it generally prevents a person’s estate from going through probate after he or she dies. Furthermore, the terms of the trust go into effect as soon as the document is created. Therefore, an individual may have assets transferred or other decisions made on his or her behalf if that person becomes incapacitated.
In most cases, the trustee is expected to balance the interests of the beneficiaries with the wishes of the person who created the trust. However, a court decision in Michigan found that a trustee may also have to regard the wishes of a contingent beneficiary as well. This could come into play if the settlor is deemed incapacitated, but there is some controversy as to when such a designation should be made.
Contingent beneficiaries may also have rights if a person creates a Cayman Special Trusts Alternative Regime, or STAR, trust. Those types of trusts allow the beneficiaries themselves the right to take challenges to court. Usually, the beneficiaries appoint one individual to act as enforcer. Unlike trusts created in the United States, beneficiaries of a STAR trust generally have the right to challenge a trust whenever decisions are made that go against its terms.
There are many issues that a person should consider when creating a trust or other estate planning documents. One such issue could be whom to designate as a trustee. While trustees do have leeway when making decisions, they tend to have a fiduciary responsibility to beneficiaries. Therefore, a trustee generally needs to be responsible and detail orientated. An attorney may be able to act as a trustee or help a person choose a suitable party for the role.