Recently in Trust administration Category

April 8, 2011

Worries About My Husband's Inheritance

historic house.jpgDear Liza: My father in-law passed away 3 years ago. Since then, the other siblings have been given their share of their inheritance. My husband will get the family home when Mom goes.  Mom came to us to say that she has made another adjustment to the will to state that... "if son (my husband) predeceases her then the home will go to our daughter and I will have life rights." Couldn't his Mom simply leave the home to her son (my husband) with no strings attached and if he were to predeceases her, would his inheritance still go to him or his estate so that our will will dictate our wishes for the home to go to our daughter when I die? Or would the remaining three siblings get the house and my daughter and I get nothing? Keep in mind the motive is that this is a historic home that everyone wants to stay in the family, yet there is no family money. This is one of those questions that I can't begin to answer specifically because there are so many things that I don't know. Most of the answer lies in the specifics of your husband's mother's estate plan. But here are two pieces of general advice:

1. Your mother-in-law's estate plan is HER estate plan and, until she dies, you really have no control over what she decides to do and how she decides to do it, unless her husband's share of the historic house is in some kind of trust that would prevent her from making an amendment and changing what would happen upon her death. Even if this were the case, that's a limitation that her estate planning attorney would be advising her about. In my state, beneficiary's are required to get notice if they are beneficiaries of an irrevocable trust like this, and have the right to see the trust, but this is not true in all states.

2. As a general matter, if your mother-in-law did leave the house to your husband without any limitations,  and if he were to die before your mother-in-law, what happens next would depend on what the estate plan said. It may pass directly to his surviving children, to you in a life estate of some sort, or to his surviving siblings, again, that's up to your mother-in-law. Honestly, she could leave it to charity if that's what she felt like doing.

It sounds like she's been willing to share her plan with you. Perhaps you need to have a frank family discussion and discuss your concerns with her. Good luck. These are not easy discussions to have, which is one reason that so many people keep their plans confidential until they've died (when they don't have to deal with the howls of outrage, disappointment, or glee that their plan may evoke). But if the family really wants to keep the house, and there's truly no money to maintain it, that's not a problem easily solved by avoidance. Perhaps the use of life insurance or other financial products could help with the issue, or perhaps the family needs to face reality now, rather than later.

March 20, 2011

Finding a Professional Fiduciary

professional fiduciary.jpgDear Liza: We're in the process of establishing a Child's Trust as part of our estate planning; the Trust would exist until our daughter turns 35 (32 years from now; we're both about to turn 50).  We have created a list of four Successor Trustees, but each one is either our age or slightly older. Nolo's advice is to list a last choice a "private trust company." What's that?  It's great that you're thinking about how old your trustees are going to be when you daughter is 35--sadly, our trustees age right along with our kids. I am not familiar with the term 'private trust company' but I think Nolo may be suggesting that you consider naming a private fiduciary as a backup trustee. This is someone who is licensed to serve as a trustee, but is not a bank or a large corporate institution. Such people are licensed in California via the Department of Consumer Affair's Professional Fiduciaries Bureau. Alternatively, you might consider allowing your daughter to become the Trustee if none of the above can serve and she is over a certain age, say 28. (Serving as her own Trustee would give her management control over the trust, but still protect the trust's assets from her creditors or a bad marriage.) You might also, though, check with the bank where you do most of your business, you might find that their rates are competitive for trust services.


February 18, 2011

Trustees Decide When Beneficiaries Don't Agree

happy family.jpgDear Liza: I am one of 5 beneficiaries of a living grandparents are both deceased now.  Everything is to be divided equally 5 ways.  There are several properties involved that need to be sold etc. One property in particular is a "cabin" in a small town. How do you decide who "gets" it if more than one party is interested, but not all interested parties want to share? As a general rule, unless the trust instrument itself says something differently, it's up to the Trustee to decide how to make the shares equal in a situation like this. Of course, it's always better if everyone can agree. And, as a beneficiary, you are entitled to full disclosure of the values of the assets so that you can make sure that the shares are equal, or very close to equal (it's sometimes hard to match up perfectly). If you disagree with an appraisal, you could request that another appraisal be made. Though I don't recommend it, you can even retain your own counsel to advocate for you in the settlement process.  Like most family situations, though, working it out is generally a better idea than getting "lawyered up."
November 23, 2010

Appointing a Bank as Executor

  woman banker.jpgDear Liza: Is it possible to appoint a bank Executor of Estate ?  I am not comfortable appointing family members or friends for a number of reasons. You bet. Many banks have trust departments who can provide services to families, as executors or trustees. They, of course, charge for this service. So, if there is a bank or financial service firm that you already work with, ask them if they have a trust department. Ask them what their fees for this are -- many charge a percentage of the assets under management, which can range from .75% to 1.5%, depending on the size of the estate. Also ask them if they require special language to be in your Will or trust, some do, and some don't. If they do, get the language and ask your attorney to incorporate that into your documents, or, if you're doing them yourself, make sure you're doing what the bank requires. Two things to think about, though. The first is that the banking industry has been through some, ahem, turmoil, lately--so you need to consider how you'd feel if your friendly local bank gets sold to some megalopolis bank and some banker in a far away city takes over as your family's executor.  If that's not OK with you, you might want to name a second choice and say that if your local bank is sold, you don't want the bank's successor to be your executor, but want your second choice to serve instead. The second thing is, if there's a particular banker you really like, you can add language to your documents that says you want that banker to do the job, even if they move to another institution with trust powers.

November 10, 2010

Ripeness is all--take your time with trust administration

clockface.jpgDear Liza: My dear friend recently died. He left his house to his mother, who lives far away. How soon can I transfer the house to her? I am eager to get this done as soon as possible because until then the trust has to pay the mortgage.  So, you have to wait until the survivorship period is over before you can distribute any property to anyone. This will be in the trust--it is usually thirty (30) days, but can be longer. A person has to survive at least that long after there's been a death to inherit anything. This is to prevent property going to someone, and then having them die and leave the property to someone else entirely. You can transfer the house the day after that period ends. But settling an estate takes time. Please don't distribute anything until you're sure you know what the bills and debts there are to pay off and whether there will be income taxes due for the last year of your friend's life. Beneficiaries are often in a big hurry to inherit, but prudent trustees take their time and let beneficiaries know that debts and bills come first.