Super-TRUST-Powers, Part II | Invincibility
Possessing immunity to any form of physical harm. Impenetrable. Unable to be broken or suffer pain. With the power of invincibility, you could literally take a bullet for your spouse, shovel 16 inches of snow from your driveway without back pain, or proudly wear a Yankees jersey to Fenway Park (I am NOT, of course, speaking from experience).
Super-TRUST-Power: Invincibility
Secret Weapon: Inheritance and Spendthrift Protections
Recall the 1985 classic movie Rocky IV, when Russian boxer Ivan Drago threatened the beloved American fighter Rocky Balboa in the ring saying, “I must break you”. During the resulting fight, Rocky proceeded to get repeatedly knocked down by Drago and would immediately pop back up like a punching bag, to which Ivan Drago eventually laments to his trainer, “This man is not human.”
Invincible. Superhuman. Unbreakable.
In the world of trusts, we ask whether the trust itself is breakable and its contents accessible. One quality of an unbreakable trust is called a spendthrift provision. This clause not only protects beneficiaries who are poor at managing money or suffer from addictions, but also protects trust assets from the interference or control of creditors, personal liability, bankruptcy proceedings, or other legal process. It does this by prohibiting the beneficiary from assigning or transferring their rights in the trust to someone else.
In order for a spendthrift provision to protect you (as opposed to your heirs), the trust must be irrevocable, since you cannot set up a revocable trust for yourself which gives you absolute control while also prohibiting you from exercising that control. That’s nonsensical. It’s like being the parent of a two year old—you have control and you don’t have control, and then you have control again only to lose it when they dart for the altar at church Sunday morning right smack in the middle of the preacher’s sermon.
In superhero talk that means you can’t mix the powers of atomic manipulation and invincibility! Nonetheless, the presence of spendthrift language in your trust can have the effect of raising the shields against most attacks.
What if a trust has no spendthrift protections or, alternatively, you want to build the Fort Knox of trusts and add inheritance security above and beyond such a provision?
To further make a trust impervious to the pain of Divorce, Debts (creditors), Disputes (lawsuits), Death taxes, Disability (state benefits) or Destructive spending habits – the pesky “Killer D’s”, arch enemies of trusts – we can build-in inheritance protections for beneficiaries. Why? Once a trust winds down and the balance passes to the next generation, the protective forcefield of the trust is shed, thereby making the inherited assets vulnerable to attacks. Envision Rocky Balboa not only getting knocked down but never getting back up. A broken man. And thus, a broken trust.
Instead, consider passing assets “in trust” rather than “outright” to your loved ones, which can ensure the attacks of the Killer D’s lose their sting.
How, you ask? By and through a separate trust for each beneficiary, most often as a sub-trust of your revocable trust that becomes effective upon your death and is created for each beneficiary to receive their inheritance. It permits them to enjoy their inheritance through the trust “for any purpose.” This discretionary structure offers superb Killer D protection because the acting trustee, as the representative of the trust, takes the bullet, allowing your beneficiaries to emerge unscathed! Attack after attack, the trust keeps popping back up, causing the assailant to conclude, “This must be a super-TRUST!”
Stay tuned for our next issue, featuring the super-TRUST-powers of healing abilities, and click here for more on wills and trusts.
Read issue I, Atomic Manipulation and Shapeshifting, here.
Read issue III, Healing, here.
Read issue IV, Super Speed, here.
