18 Dec How can I make sure my husband gets this inheritance?

Q. When my parents died, they left me an IRA within a trust. When I die, the IRA would go to my children. This leaves my husband out. We are planning our retirement together but if I die first, he won’t have access to the IRA anymore. The custodian said I can’t make him a beneficiary. Is there anything I can do so my husband isn’t left with nothing?
— Married and staying that way

A. This is a tough one.

Unfortunately, there are very few options that would enable you to leave the trust assets to your husband if he survives you.

Trusts are often used to control one’s assets after death to restrict use of the funds for selected individuals or limited purposes, said Richard I. Miller, co-chair of the elder law department at Mandelbaum Salsburg in Roseland.

“It is particularly common for trusts to be established for the life of a child with the balance distributed to his or her descendants after the child’s death,” Miller said. “This assures assets stay in the bloodline and avoid distribution to an ‘in-law’ who may remarry or leave funds to children from a different relationship.”

Miller said some trusts include a “power of appointment” provision that enables the beneficiary to select the remainder beneficiary after his or her death.

Sometimes this power is broad — a “general power of appointment” — that permits the lifetime beneficiary to designate anyone as the remainder beneficiary, Miller said. Other times this power is restricted, called a “limited power of appointment,” that defines the class of people from which the remainder beneficiary can be selected.

In your case it is important to determine if a power of appointment is included in the trust established by your parents and, if so, whether it permits a distribution to your spouse, he said.

Miller said it may also be possible to modify the trust with consent of all the remainder beneficiaries.

“The remainder beneficiaries would need to be over age 18 and should have independent representation before agreeing to waive their rights to the trust,” he said. “This result is generally difficult to accomplish and may be resisted by the trustee charged with effectuating the terms of the trust outlined by the grantor.”

You do have other options, Miller said.

You could explore the possibility of increasing or accelerating the distributions from the trust so you acquire more of the assets to use or dispose as you wish during your lifetime, Miller said

Many trusts authorize the trustee to exercise discretion to make distributions to the lifetime beneficiary for health, education, maintenance or support, Miller said, noting this standard can be interpreted broadly or narrowly depending on the trustee.

“Trustees, however, must proceed cautiously as the trustee has a fiduciary duty to balance the interests of the lifetime and remainder beneficiaries,” he said. “This generally discourages trustees from depleting the trust in favor of the lifetime beneficiary due to claims that could be asserted by the remainder beneficiaries alleging the trust assets were not adequately preserved.”

The terms of every trust are different and must be reviewed carefully, Miller said, so you should meet with an experienced trust and estate attorney who can explain the provisions of the trust document and outline your rights and options.

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This story was originally published on Dec. 18, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.