Dad takes children's trust because of technicality?

[cconlon]

What is the name of your state? MA

My mother set up a revocable trust in 1996 and contributed, for three children, the maximum allowable per year that you may gift to a child under the law without incurring tax penalties. A year before her passing she realized it was set up incorrectly (potentially due to lawyer incompetence )and taxes were not paid yearly on the trust. Because the taxes were set up incorrectly my father took the entire trust as part of the estate and totally ignored the intent of the signed and notarized trust. Two questions: is he allowed to take his children’s trust for himself due to the tax mis-filing or could this be legitimately contested? And secondarily was it the lawyers fault for the tax mis-filing or my mothers, ie should she have been notified by the lawyer to file the taxes or was it her responsibility to know to do that?

Any help would be greatly appreciated
Thank you

 

[Dandy Don]

Father may or may not be completely truthful with you. Have you ever seen a copy of the trust or the original document to see exactly what it said?

If it is true that the tax obligation was not taken care of, then you need to ask him for exact details--how much did the taxes turn out to be, show us a copy of the tax return that shows exactly how much taxes were paid, and how much was left over to be distributed to beneficiaries? He is trying to imply that the entire trust was consumed by taxes, and you, in your ignorance of the facts, don't realize that that would be most unlikely.

He could have used that as a phony excuse to try to revise the trust so he can claim it entirely for himself, which would be illegal. As soon as your mother's death occured, the trustee (whoever that was) had a legal obligation to fulfill the trust exactly as it is stated, without making any revisions. Is dad the trustee?

If he won't give you the answers you need, then you need to hire your own trust attorney. It may be possible to resolve this without contesting, which would be expensive to both parties in attorney fees, but if dad won't budge or can not give a reasonable explanation of what happened with the trust, then a lawsuit is unavoidable.

Responsibility about tax information is joint--it is primarily mother's responsibility (or trustee) to figure out what the exact tax liability is, but attorney would have been helpful to research this for her or the trustee so that it could have been planned for in advance.

DANDY DON IN OKLAHOMA ([email protected])

 

[seniorjudge]

What is the name of your state? MA

My mother set up a revocable trust in 1996 and contributed, for three children, the maximum allowable per year that you may gift to a child under the law without incurring tax penalties. A year before her passing she realized it was set up incorrectly (potentially due to lawyer incompetence )and taxes were not paid yearly on the trust. Because the taxes were set up incorrectly my father took the entire trust as part of the estate and totally ignored the intent of the signed and notarized trust. Two questions: is he allowed to take his children’s trust for himself due to the tax mis-filing or could this be legitimately contested? And secondarily was it the lawyers fault for the tax mis-filing or my mothers, ie should she have been notified by the lawyer to file the taxes or was it her responsibility to know to do that?

Any help would be greatly appreciated
Thank you

Because the taxes were set up incorrectly my father took the entire trust as part of the estate and totally ignored the intent of the signed and notarized trust.

Before we could answer your questions, we would have to know how this happened. Was there a separate lawsuit declaring this trust invalid?

We need facts and details.

 

[Gene & Lee]

Will & Trust issues

It would really be worth the money to meet with a Trust Attorney. Once you find an attorney you feel comfortable with have him write a letter to your father requesting an accounting of will and trust.

 

[cconlon]

Dandy Don,
Thank you for your response,

There is plenty of money still in the trust. When it was originally set up the taxes were not paid on it and before my mom died her lawyer told her it was invalid because it was set up incorrectly. There is still a signed+ notarized trust but that apparently means nothing. Because of this, it rolled into the estate to which my dad has ownership. He was not designated as the trustee because my mother deemed him incompetent to disburse it according to her wishes and this was exactly what happened.


Senior Judge,

I would like to thank you as well for responding to my inquiry

As I mentioned above, my mothers lawyer (who she dropped after the trust mess-up is coincidentally my fathers lawyer now), told my mother that the trust was invalid or not technically set up as a trust because of the misfiling and that it could be set up correctly if she re-filed her taxes for the past 6 yrs. She died two weeks later and obviously didnt have time to re-file. The money and trust documents still exist and no there was no official ruling to the invalidity of the trust unless something happened in probate that I dont know about. Other than that, the word of the lawyer who set the trust up stating it was done incorrectly and therefore invalid is the only statement that it is invalid or illegal.


Gene & Lee

I am inclined to agree

 

[seniorjudge]

It would really be worth the money to meet with a Trust Attorney. Once you find an attorney you feel comfortable with have him write a letter to your father requesting an accounting of will and trust.

Yes, time to get a lawyer to represent YOUR interests.

 

[Dandy Don]

You need a trust attorney to look at the trust document that you have to get a second opinion about whether the tax matter should significantly affect the administration of the trust or not. Who is the trustee of the document that you have? Something seems odd here--if father was not the trustee, he had no business making the decision to put the assets of the trust somewhere else (rolling into the estate). I guess the attorney did this, but someone needs to review this action to see if he had the authority to do it or not. May be okay if it was pour over will, but it still needs to be examined.

So what does this attorney say about what should happen if the tax matter is straightened out--are the original beneficiaries still cut out or deleted or are they still supposed to get anything?

DANDY DON IN OKLAHOMA ([email protected])