Division of trust assets after death

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pakcer
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Division of trust assets after death

Post by pakcer » Fri Sep 22, 2017 4:26 pm

At death, Grantor has a living trust that calls for 200k to ChildA and 200k to ChildB.
Outside of the trust, ChildB receives another asset that is worth 200k, say a bank account that just had POD on it.
Grantor's overall wish was that the entire estate is to be divided between ChildA and ChildB.
Is there any problem with the trust assets then being divided 300k to ChildA and 100K to ChildB to keep things equitable?
Would the brokerage house where the 400k trust account is located have a problem with that, or would they want the 50/50 split of the trust adhered to, if for nothing else than to cover themselves legally?
What if the Grantor had written a letter to ChildB, who is also the successor trustee, explaining that the ultimate goal is for the entire estate to be divided 50/50?
Thank you!

Longdog
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Re: Division of trust assets after death

Post by Longdog » Fri Sep 22, 2017 5:07 pm

I think it depends on the trustee’s willingness to do this, but even more so on the beneficiaries of the trust. Who is the trustee? Assuming the two beneficiaries are on good terms and want to honor the wishes of their father, I would suspect a well-drafted and appropriately witnessed letter signed by the two beneficiaries and presented to the trustee could achieve this goal.
Steve

Yooper16
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Re: Division of trust assets after death

Post by Yooper16 » Fri Sep 22, 2017 5:12 pm

Shouldn't be a big deal. Same happened with husband and his sister. There was a will that stipulated 50/50 after last parent died. All accounts had had the beneficiary statement adjusted at some point to reflect the 50/50. One was missed.

The family lawyer wrote a document(I forget what it was titled) and included supporting documents such as the will, other inherited accounts etc. Jims sister attached a notarized statement and declined 1/2 of this account and asked that it be directed to him. Took a bit longer to settle everything that's all.

If there is a family issue between the kids, and the one sibling doesn't want to share, then all bets that the above will work are off.

I am not a lawyer, just someone who went through the same.

NotWhoYouThink
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Re: Division of trust assets after death

Post by NotWhoYouThink » Fri Sep 22, 2017 5:26 pm

Is Child B the only trustee, no corporate or independent trustee?

A trustee's job is to carry out the terms of the trust, not to try to reverse engineer a desired solution. If the trustee wants to do that in this case, ChildB can make a gift to Child A to even things out, and report the gift (at least the part above $14K this year, for instance.)

Of course that would happen after all of the other estate closing activities had been completed. Because things do crop up.

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celia
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Re: Division of trust assets after death

Post by celia » Fri Sep 22, 2017 5:40 pm

pakcer wrote:
Fri Sep 22, 2017 4:26 pm
Would the brokerage house where the 400k trust account is located have a problem with that, or would they want the 50/50 split of the trust adhered to, if for nothing else than to cover themselves legally?
The brokerage house should not have anything to do with the division of trust assets. They probably don't even know what the total division is and if there are assets held elsewhere. Their job is to confirm that the correct person is acting as trustee and follow his/her directions as reflected in the paperwork that is submitted (along with the death certificate).

But they do have something to do with named beneficiaries on accounts and the split that was designated by the account owner.

Lastrun
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Re: Division of trust assets after death

Post by Lastrun » Fri Sep 22, 2017 6:00 pm

pakcer wrote:
Fri Sep 22, 2017 4:26 pm
At death, Grantor has a living trust that calls for 200k to ChildA and 200k to ChildB.
Was this a specific bequest or just a general 50/50 distribution of the balance of the trust fund?
pakcer wrote:
Fri Sep 22, 2017 4:26 pm
Grantor's overall wish was that the entire estate is to be divided between ChildA and ChildB.
......
What if the Grantor had written a letter to ChildB, who is also the successor trustee, explaining that the ultimate goal is for the entire estate to be divided 50/50?
Was such a letter in fact written? How else do we know the grantor's intent? Was the POD on the account set up before or after the trust was established? Who set up the POD, the grantor, a POA? The POD shows a contrary intent, no?
pakcer wrote:
Fri Sep 22, 2017 4:26 pm
Is there any problem with the trust assets then being divided 300k to ChildA and 100K to ChildB to keep things equitable?
Would the brokerage house where the 400k trust account is located have a problem with that, or would they want the 50/50 split of the trust adhered to, if for nothing else than to cover themselves legally?
If the facts show the grantor's clear intent:

The short answer is that under many state laws, the trustee/executor could likely make a claim against the POD, particularly if the estate had solvency issues.

In states that follow the Uniform Trust Code, a non-judicial settlement agreement may allow all the parties to agree to the disparate distribution from the trust, release the trustee, and provide assurance to the financial institution.

Also, since there is a claim or dispute, this likely avoids the "gift over" issue after distribution from the trust.

LarryAllen
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Re: Division of trust assets after death

Post by LarryAllen » Fri Sep 22, 2017 6:03 pm

Trustee and benes should prepare a simple agreement documenting these. Brokerage house won't be involved. They just follow trustee's instructions as to trust accounts.

cherijoh
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Re: Division of trust assets after death

Post by cherijoh » Fri Sep 22, 2017 6:03 pm

celia wrote:
Fri Sep 22, 2017 5:40 pm
pakcer wrote:
Fri Sep 22, 2017 4:26 pm
Would the brokerage house where the 400k trust account is located have a problem with that, or would they want the 50/50 split of the trust adhered to, if for nothing else than to cover themselves legally?
The brokerage house should not have anything to do with the division of trust assets. They probably don't even know what the total division is and if there are assets held elsewhere. Their job is to confirm that the correct person is acting as trustee and follow his/her directions as reflected in the paperwork that is submitted (along with the death certificate).

But they do have something to do with named beneficiaries on accounts and the split that was designated by the account owner.
My late mother had a living trust. She also had mutual funds with about a half dozen mutual fund families. When we were liquidating the trust, some of the funds just wanted a copy of the part where my brother and I were named joint successor trustees - along with their own form and a copy of the death certificate. But two of them required a copy of the entire trust document. :shock: We instructed all the financial institutions to split everything 50/50 in compliance with her wishes (and the instructions in the trust document). All her assets were in the trust (except for her ~12-year old car which we donated to charity).

Gill
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Re: Division of trust assets after death

Post by Gill » Fri Sep 22, 2017 6:58 pm

Absent an agreement among the beneficiaries, you play it as it lies. Each beneficiary takes half the trust and the POD beneficiary keeps that asset.
Gill

fourwheelcycle
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Re: Division of trust assets after death

Post by fourwheelcycle » Sat Sep 23, 2017 11:07 am

I just checked our revocable trust brokerage account. Vanguard has a copy of the first and last pages of the actual trust. In our Account Maintenance section there are no beneficiaries listed for the trust, so unlike taxable account TOD or IRA beneficiary assignments I expect Vanguard will do nothing with the funds in our trust when the second of us dies. Rather, they will simply recognize the successor trustee named in the trust, one of our adult sons, and then allow the successor trustee full control of the account.

Our trust indicates our two sons can make any changes they wish to the trust based on their joint agreement, so I certainly think they could adjust the stated 50/50 split of the assets if they agreed to do so.

Gill
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Re: Division of trust assets after death

Post by Gill » Sat Sep 23, 2017 4:37 pm

fourwheelcycle wrote:
Sat Sep 23, 2017 11:07 am
I just checked our revocable trust brokerage account. Vanguard has a copy of the first and last pages of the actual trust. In our Account Maintenance section there are no beneficiaries listed for the trust, so unlike taxable account TOD or IRA beneficiary assignments I expect Vanguard will do nothing with the funds in our trust when the second of us dies. Rather, they will simply recognize the successor trustee named in the trust, one of our adult sons, and then allow the successor trustee full control of the account.

Our trust indicates our two sons can make any changes they wish to the trust based on their joint agreement, so I certainly think they could adjust the stated 50/50 split of the assets if they agreed to do so.
That is the key. There must be agreement or the terms of the trust prevail.
Gill

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