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How to control your heirs from the grave

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With estate and gift planning regulations set to expire in January, people are scrambling to set up trusts before year-end. Though, generally speaking, the law allows people to direct assets as they wish, there are certain limits. Provisions that run contradictory to public policy — including requirements that promote divorce, criminal behavior or preferential treatment based on factors like race — have all been struck down in court. Vague phrasing can also be an obstacle; a Missouri court once struck down a provision requiring brothers to be capable of “prudent exercise, control and ownership” of a piece of real estate so that “no further danger shall exist.”

Once big-picture concerns like these have been eliminated, clients and advisors should think about the specifics of the trust, such as who is included and what incentive provisions make sense.