My spouse, along with her two siblings, is the beneficiary of a residual trust. The trust is decades old and resulted from the untimely death of their father. I don't know the specifics of what went into it but presumably it was assets or a life insurance payout that was not otherwise delineated in the will. The trust has a present value of about $300,000.
In the past the trust made annual payments to my mother in law, which she then distributed evenly to the 3 kids. However, recently she made a change such that 5% of the assets, or $5,000, whichever is greater, is now distributed annually evenly among the kids. Typical payments have been around $15k total.
The $5kish is nice to have but does not make much difference in our lives.
However, we have college costs coming up, and the $100,000 WOULD make a BIG difference. We were told by my MIL that there is some difficulty or complication with liquidating the trust, or a portion of it. That's all we were told. It's possibly tied to MIL's business, though unclear how.
Is there some reason why, as a beneficiary, my spouse could not liquidate and claim her 1/3?
The investments in the trust have AWFUL expense ratios but changing those, too, seems to be an issue. The trust is held by a bank.
Residual Trust - help understanding how it works
Re: Residual Trust - help understanding how it works
What does her father's Will say in that regard?
Re: Residual Trust - help understanding how it works
Get a copy from the court where his Will was probated (in the county where he lived at the time of his death). Or ask her. Or ask the bank that's the trustee. Or ask one of her siblings.
Re: Residual Trust - help understanding how it works
Without knowing the terms of the trust, it's only speculation, but it sure sounds like the trusts primary current beneficiary is your mother in law.
-
WarAdmiral
- Posts: 213
- Joined: Mon Jan 20, 2020 7:09 pm
- Location: Boston
Re: Residual Trust - help understanding how it works
As mentioned upthread, it all depends on how the trust is structured. A beneficiary has no control over how much and when they would get their share, unless the beneficiary is also the successor trustee. You have to find out who the executer of the trust (successor trustee) is and ask them this.
Last edited by WarAdmiral on Wed Jan 13, 2021 11:03 pm, edited 1 time in total.
Re: Residual Trust - help understanding how it works
I found some addl info in our files.
The primary beneficiary trustee is my MIL; however there is a third party that was named as co-trustee. (It is very complicated but I believe it has to do with his business interests at the time; a mortgage on a property may have gone into the trust, and this party held the mortgage. Again, I am not sure. I don't even understand the letter that explains the arrangement.)
Regardless, this third party takes no money from the trust. But perhaps this explains why it cannot be easily liquidated (?).
The primary beneficiary trustee is my MIL; however there is a third party that was named as co-trustee. (It is very complicated but I believe it has to do with his business interests at the time; a mortgage on a property may have gone into the trust, and this party held the mortgage. Again, I am not sure. I don't even understand the letter that explains the arrangement.)
Regardless, this third party takes no money from the trust. But perhaps this explains why it cannot be easily liquidated (?).