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When my parents set up their inter-vivos trust, they named 3
co-trustees(*): myself, my wife, and my sister. This was done as much
for family harmony as for any other reason, as my sister does not
have the financial acumen to be a good trustee.
But it is worse than I expected. My sister is using the trust's
resources for her own living expenses.
I don't want to have to go to court to remove her as a trustee, but I
was wondering if it would be possible for my mother to simply revoke
the trust and write a new one without my sister as trustee.
The problem is, she is not entirely "all there". She can comprehend
things for a short time, but 5 minutes later she will have forgotten
what you told her.
So my question is, what is the threshold for revoking a living trust
and/or for creating a new one? Is it merely "testamentary capacity",
knowing who your heirs-apparent are and in general what your assets
are? Or is it something more? How much more?
IOW, if my mother makes a new trust, how likely is it to stand up
against a challenge by my sister? What criteria will likely be
applied? (I'm assuming that my sister will not go to court if she has
essentially no chance, but probably will if she has any substantial
chance of being able to continue using the assets for her own
expenses.)
(*) Actually, they named themselves, with the 3 of us as successor
co-trustees. But my father is dead, and we have gotten my mother to
resign as trustee because she can no longer manage her affairs. (We
also followed the forms for removing her as a trustee, to ensure that
it would "take" regardless of whether or not she was "of sound mind"
at that time.)
--
I pledge allegiance to the Constitution of the United States of America, and
to the republic which it established, one nation from many peoples, promising
liberty and justice for all.
Feel free to use the above variant pledge in your own postings.
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On Sat, 10 Jul 2004 15:37:18 -0400, bgold@nyx.net (Barry Gold) wrote:
So my question is, what is the threshold for revoking a living trust
and/or for creating a new one? Is it merely "testamentary capacity",
knowing who your heirs-apparent are and in general what your assets
are?
Yes, I believe that is the appropriate standard in most (all?) states.
*Dan Evans
*Author of the Tax Protester FAQ
*http://evans-legal.com/dan/tpfaq.html
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Barry Gold wrote:
I don't want to have to go to court to remove her as a
trustee, but I was wondering if it would be possible for
my mother to simply revoke the trust and write a new one
without my sister as trustee.
The problem is, she is not entirely "all there". She can
comprehend things for a short time, but 5 minutes later she
will have forgotten what you told her.
So my question is, what is the threshold for revoking a
living trust and/or for creating a new one? Is it merely
"testamentary capacity", knowing who your heirs-apparent
are and in general what your assets are? Or is it something
more? How much more?
It's testementary capacity, but that includes understanding the nature
of the actions being taken. If I were you I'd have a psychiatrist
present when your mother signs the amended trust, so he can testify
that she had proper capacity. Your mother's lawyer should be able to
determine exactly what must be proven, and that has to be explained to
the psychiatrist before this all happens.
(*) Actually, they named themselves, with the 3 of us as
successor co-trustees. But my father is dead, and we have
gotten my mother to resign as trustee because she can no
longer manage her affairs. (We also followed the forms for
removing her as a trustee, to ensure that it would "take"
regardless of whether or not she was "of sound mind"
at that time.)
Then you may not be able to remove her from any part of the trust that
became irrevocable when your father died. Instead you may have to go
to court to get her removed for breach of her fiduciary duty.
Stu
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Stuart Bronstein <spamtrap@lexregia.com> wrote:
Then you may not be able to remove her from any part of the trust that
became irrevocable when your father died. Instead you may have to go
to court to get her removed for breach of her fiduciary duty.
There is not an irrevocable trust. My parents did create an A/B
trust, but the wording left it up to the trustees how to divide the
estate. All three trustees (and the remaining trustor) agreed that
there was no point in creating another trust because the total estate
is less than the exemption. It's been more than 9 months since my
father died, so I assume that decision can not be changed any more?
--
I pledge allegiance to the Constitution of the United States of America, and
to the republic which it established, one nation from many peoples, promising
liberty and justice for all.
Feel free to use the above variant pledge in your own postings.
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Barry Gold wrote:
Stuart Bronstein <spamtrap@lexregia.com> wrote:
There is not an irrevocable trust. My parents did create an
A/B trust, but the wording left it up to the trustees how to
divide the estate. All three trustees (and the remaining
trustor) agreed that there was no point in creating another
trust because the total estate is less than the exemption.
It's been more than 9 months since my father died, so I assume
that decision can not be changed any more?
Assuming that you're right, that the entire trust is revocable by her,
your mother need only amend the portion of the trust designating
trustees. She doesn't have to revoke the trust.
But again, get the exact parameters from a local lawyer for the
standard a court would look at to determine testementary capacity, and
have a psychiatrist (or two) as witnesses who can testify that, at the
time your mother executed the amendment, she was competent under that
test. This is not a legal requirement, but a practical strategy to
avoid problems later on.
Stu
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On Mon, 12 Jul 2004 18:25:19 -0400, Dan Evans <dan@evans-legal.com>
wrote:
On Sat, 10 Jul 2004 15:37:18 -0400, bgold@nyx.net (Barry Gold) wrote:
So my question is, what is the threshold for revoking a living trust
and/or for creating a new one? Is it merely "testamentary capacity",
knowing who your heirs-apparent are and in general what your assets
are?
Yes, I believe that is the appropriate standard in most (all?) states.
Not necessarily. IIRC, case law in Oregon suggests that the relevant
level of capacity for dealing with a trust is capacity to contract,
which is slightly higher than testamentary capacity because it
requires a bilateral transaction.
Daniel Reitman
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