Legal Question in Wills and Trusts in Illinois

Re: Trust and inflation

You are right that inflation probably ought to be taken into account. $4,000 20 or 30 years from now will almost certainly not go anywhere near as far as it does in today's dollars. Unless you have a prenup, you probably cannot force him to change it, but you might want to point out to him this potential problem. You might pick 4 or 5% or it could be pegged to some national inflation or cost of living index. It should be incorporated into the trust and be prepared by an attorney to ensure that it's done properly.

Re: Trust and inflation

You've put a finger on the problem of naming specific figures -- inflation.

It is reasonable to be concerned about the long-term effects of inflation. At a 3% rate of inflation, in 25 years that $4,000 will have the purchasing power of $2,000.

When a trust is set up for a spouse it often provides for income (with the trustee trying to adjust investments to provide appropriate income) plus a power to invade principal for the spouse's needs.

It reads like your husband has set up a Charitable Remainder Annuity Trust to pay you a fixed annuity with the remainder going to charity.

The bad news -- such a trust cannot have either invasion of principal or a link to inflation to increase the income.

The good news -- it *can* have a fixed annual percentage increase in the amount of income. So he could say to annually increase the amount by 4% -- some years you'll beat inflation, some years you'll lose, but it should cover you in the long run. Many attorneys don't realize this is possible, so it may not have been suggested to him and he may not have thought of it.

Another adjustment possibility is in the $4,000 starting point. Hopefully, it will be many years before this comes into play. The $4,000 *starting point* may have much less purchasing power than it does today. This *can* be adjusted in the document. Often when I have a specific figure I put in an adjustment such as "the ratio of the Consumer Price Index for the Chicago Area on the date of my death to that index on the date of this instrument".