How can my father get out of this TRUST?

[tomgavin]

What is the name of your state (only U.S. law)? Pennsylvania
About 15 years ago, my father took over as Trustee of my late Aunt's will. My daughter and nephew were given large amounts of money to be used for their education. The Will states that the monies have to be completely turned over by age 25 but, at the discretion of the Trustee, the remaining funds can also be given by age 21 or over.

Since they are both 21 now, my father wants to give each the remaining funds in their trust accounts. Over the years, he's paid for education costs for each of them. There is still between 45 and 75K in each of their accounts.

Can he just close the accounts, pay them what's in there, pay the taxes and be done with it??? I don't see why he'd need an attorney. The case hasn't been before the Court in over 15 years and both are now 21. Any feedback is appreciated. Thank you.

 

[justalayman]

About 15 years ago, my father took over as Trustee of my late Aunt's will.

actually, no, he didn't. A trustee lords over a trust. A will is presented to probate and the executor of the estate lords over that process.

Can he just close the accounts, pay them what's in there, pay the taxes and be done with it???

do the terms of the trust allow for that? If not, then no, he cannot do that. If it does, then he can.



If he has to ask these questions he really should be consulting an attorney who can read the trust documents regarding his rights and powers here. If he screws up he can be held personally liable for damages he caused.

 

[tomgavin]

actually, no, he didn't. A trustee lords over a trust. A will is presented to probate and the executor of the estate lords over that process.





do the terms of the trust allow for that? If not, then no, he cannot do that. If it does, then he can.



If he has to ask these questions he really should be consulting an attorney who can read the trust documents regarding his rights and powers here. If he screws up he can be held personally liable for damages he caused.

thanks. Not sure what you mean by damages. The beneficiaries have been getting their funds and will get the remaining monies. My father is their grandfather and they are extremely grateful for all he has done.

 

[justalayman]

thanks. Not sure what you mean by damages.

As a trustee, his is responsible for the assets of the trust and if he does something that is improper and it causes a loss to the beneficiaries, he can be held personally liable for those losses to the beneficiaries. The losses would be considered damages as in the beneficiaries are damaged by the loss.

 

[Dandy Don]

If there was a will AND a trust, you may not be aware that the trust document supersedes the will and it is the language and instructions of the trust only that the trustee must use for guidance, no matter if it conflicts with what the will says. It would be wise for the trustee to consult with a trust attorney so the trust attorney's expertise can insure that the trustee is doing/has done everything correctly and legally so there will be no complications and that all forms are filled out properly.

 

[curb1]

You asked, "Can he just close the accounts, pay them what's in there, pay the taxes and be done with it???" If the wording in the trust is clear, yes distribute the assets and the trust will basically be ended. It could be helpful to spend a half hour with an attorney with trust experience to confirm. Problem is that there are some attorneys who might "milk" the situation as much as possible for higher fees.

 

[tomgavin]

You asked, "Can he just close the accounts, pay them what's in there, pay the taxes and be done with it???" If the wording in the trust is clear, yes distribute the assets and the trust will basically be ended. It could be helpful to spend a half hour with an attorney with trust experience to confirm. Problem is that there are some attorneys who might "milk" the situation as much as possible for higher fees.

Thank you. It says in the will that "If my trustee (who is my father), in my trustee's sole discretion determines that it is desirable to do so, my trustee may, without further responsibility, terminate any trust under this will and pay the the then remaining principal and income of that trust to the persons (my 22 year old daughter and my 21 year old nephew) then eligible to receive income therefrom in such amounts, proportions as my trustee may think is appropriate.

My father has been handling this for 15 years. He's now 85 and is cognitively slowing down, forgetting things, etc. He's paid out a good bit of these funds in educational and medical costs, as specified earlier in the Will.

As long as he pays final taxes on interest earned, I'm thinking from these responses that an attorney is not needed. There is NO POSSIBLE WAY my daughter or nephew would ever come back looking for some potential extra money they think might be there. There is NO WAY. They are so grateful for everything my father has done and the money has been invested extremely well.

So, can he just disperse the funds and get out of this??? Does anything need to be sent to some Court or Office of Wills and Estates??? Thanks so much for reading.

 

[justalayman]

Did you miss the part where the will does not control the trust? The rules of the trust alone control the trust so that is what must be reviewed.

 

[tomgavin]

Did you miss the part where the will does not control the trust? The rules of the trust alone control the trust so that is what must be reviewed.

What I was referring to was the language of the Trust that is on the Trust document and on the Will. Same language for both.

 

[justalayman]

Well, I don't know where you hail from but around here when somebody says;

In the will it says


They are referring to what is in the will. If the want to refer what is stated in the rules of the trust they say something like; in the trust is says...


And nobody here would have any way of knowing what was written in either document or whether they contained any similar language.

Given you keep referring to the will as controlling I would strongly suggest you take the trust documents and read them very thoroughly to make sure you are not depending on the language in the will that you believe is identical to that within the trust documents. It's those little "gotchas" like discovering there were actually some differences between the two that get ya.


One clue there is a probiem is you make a statement there is between $45k and $75k in each of their accounts yet the last statement you made said the trustee could divide the remainder of the trust as they saw fit. That means there are really no seperate accounts. While your father may have maintained a sort of seperate account for each, given that statement there really is no individual accounts.

Not trying to beat you up but simply make sure you are clear on the directives of the trust and your father does comply with those directives. It's easier to make sure you do it right rather than having to go back and correct an error.

 

[tomgavin]

Well, I don't know where you hail from but around here when somebody says;

In the will it says


They are referring to what is in the will. If the want to refer what is stated in the rules of the trust they say something like; in the trust is says...


And nobody here would have any way of knowing what was written in either document or whether they contained any similar language.

Given you keep referring to the will as controlling I would strongly suggest you take the trust documents and read them very thoroughly to make sure you are not depending on the language in the will that you believe is identical to that within the trust documents. It's those little "gotchas" like discovering there were actually some differences between the two that get ya.


One clue there is a probiem is you make a statement there is between $45k and $75k in each of their accounts yet the last statement you made said the trustee could divide the remainder of the trust as they saw fit. That means there are really no seperate accounts. While your father may have maintained a sort of seperate account for each, given that statement there really is no individual accounts.

Not trying to beat you up but simply make sure you are clear on the directives of the trust and your father does comply with those directives. It's easier to make sure you do it right rather than having to go back and correct an error.

Thanks. There are separate accounts and always have been. They were each entitled to 10% of the Estate. The reason one is less than the other is because my daughter's funds have been used more as she's attended college (now in her 4th year) and my nephew has only gone through one semester thus far.

 

[curb1]

I can't understand any problem from liquidating the trust. Write the checks and terminate the trust if no other beneficiaries are involved.

 

[ecmst12]

That's a lot of money. I see no significant downside to having a lawyer handle the final transactions, any cost would be negligible compared to the cost of screwing up. And your nephew may need help managing his account to ensure that the next 3.5 years of his educational costs will still be covered, so at the very least, a financial advisor would be a wise investment.