FAQs: What Is A Special Power of Appointment Trust?

A SPA Trust – Special Power of Appointment Trust – is an opportunity for you to take advantage of the current gift tax exemptions – which are scheduled to be cut in half in 2026, and potentially even sooner to protect your assets. SPA trusts are irrevocable trusts that are very flexible and allow the creator of the trust to appoint trustees with the authority to distribute the assets. While a SPA Trust, like other irrevocable trusts, cannot be changed, modified, or terminated by the person who created it they do offer a great deal of flexibility and control to the person who creates the trust, the grantor.

Benefits Of A SPA Trust

A SPA Trust offers several benefits over other types of trusts and asset protection tools:

• Transfer wealth from your estate under 2020’s generous gift tax exemptions
• Retain access to trust assets
• Protect your estate from creditors
• The grantor can give powers to trustees who can take actions that benefit the grantor – including returning assets back to the grantor
• Any kind of asset can be put into a SPA trust with the exception of retirement accounts.

Special Power of Appointment Trusts are available in Illinois.

There are also some disadvantages to a Special Power of Appointment Trust:

• The grantor cannot be a direct beneficiary of a SPA Trust
• Creditors can challenge the trust if the grantor receives assets back from the trust
• The grantor must give up control over the management of the assets put into the trust

If you think a SPA Trust is a good way to protect your assets, an experienced trusts attorney. A Special Power of Appointment Trust should be drafted by an estate planning attorney as part of a comprehensive estate plan that includes will, trust, power of attorney, and healthcare directive documents.

DuPage County Trusts Attorney

If you have questions about Special Power of Appointment Trusts or any other estate planning topics, please contact us to schedule a free consultation. To learn how an estate planning lawyer could help, call us for a consultation at 630-687-9100.

We provide legal services in Cook, DuPage, Kane, Lake, and Will counties.