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  1. #1
    Cliff421 is offline Member
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    How much can be changed in a joint trust after one party dies?

    What is the name of your state (only U.S. law)? Oregon

    More than a decade ago my Mom and Dad had a good estate planning attorney create a Joint Living Trust for them. Everything was put into the trust including bank accounts with trust printed on the checks, vehicles, home, even household possessions. The addendum has been kept current to include the current car etc.

    My folks were much younger then and their minds were sharp.

    I have one sibling and everything is left jointly to the two of us.

    Due to my background in banking, title insurance and real estate, and because I'm a good businessman, my folks named me the first successor trustee and my sister the second. My sister is a retired home ec teacher and knows nothing about the business world out there. She's also a sneak cheat.

    Mom has died and Dad is now 94 and a bit senile although he's pretty good for his age.

    A month ago when my sister was here from out of state visiting, she, behind my back, typed up a new trust, changing it to name herself as first successor. She also added some clauses she found in another trust which I don't even know are enforceable. One is "If any heir contests this trust in court, they (sic) will lose all of their inheritance."

    My sister took that trust and Dad to a title company and had him sign it and had it notarized. She put a copy in Dad's files and I, being suspicious, found the copy.

    So, my Mom died leaving me half of everything and the first ST and a trust without the extra new clauses.

    Please, without me starting a family feud, where do I stand and what are my options? Can my Mom's "will" be changed after she dies?

    My sister has already bled Dad of cash and Mom's jewelry and she won't play fair after Dad passes unless I'm in charge.

    Thanks!
  2. #2
    curb1 is online now Senior Member
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    Did the bank accounts etc. get changed to the name of the new trust? What does your Dad say about this? Did/does he feel manipulated? Was this his idea, or did she push him into this?
  3. #3
    Cliff421 is offline Member
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    Dad is just old enough that he would be unable to comprehend that document and no, he didn't ask for it. He trusts my sister (68 Y/O) enough to just get led along. No, he hasn't been declared incompetent and I wouldn't do that to him anyway. I love my Dad and he's bright enough that this would humiliate him.

    Neither the bank accounts nor the titles and deeds to anything else got changed. Dad is the trustee and holds the accounts.

    My sister did take Dad to the bank to give them a copy of the "revised" trust, and the bank just swapped it out. Both my sister and I have the bank's form of a POA for those bank accounts (at least Oregon won't allow us to be joint on the account; permission must be by POA attached to the sig card) and since my sister knows I can look into the accounts, she has taken no money with her sig. She has gotten Dad to write her checks. Even if the accounts were changed or I was removed as POA, Dad still gets his bank statements and is more than happy for me to "check them out" so nothing can be hidden from me.

    At least in Oregon, accepting valuable gifts from elders is a crime under "elder financial abuse" but that doesn't scare my sister. I wouldn't prosecute her because Dad would think poorly of me to say the least. He gave her those things, in his mind.

    Back to the question. Can the trust be changed in such areas as 1st ST and adding legal demands after Mom died? Was it a joint agreement where Dad agreed to uphold Mom's wishes after she died, including in those areas?

    I am willing to go to court and get the new trust tossed if I become of the opinion that it's void or voidable.

    Thanks!
  4. #4
    Cliff421 is offline Member
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    PS. I am of the belief that at Dad's age, if I go before the court and allege that his assets are in danger, and show them the two trusts, I could get appointed temporary guardian to give me standing to question the new trust in court.
  5. #5
    tranquility is offline Senior Member
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    No one can tell without seeing the trusts. In the old days, most such trust schemes would be set up to create a "B" trust on the death of the first parent. That trust is irrevocable, but needs to be funded. Many, when the calculations indicate no estate tax advantage, don't fund that trust. Is it an error? Yes. But, the original trust documents may not have been written to require the funding of the B trust if the advantages don't materialize. For recently written trusts, some don't include a B trust because of the change of the estate tax laws. Finally, B trust is usually only most important in planning if one of the parties comes in from a second marriage or where the parents otherwise have different wishes for their assets after death.

    As to the problem to the new trust, strictly speaking, in terrorem clauses (To keep people from challenging the instrument.) are enforceable, but need to be carefully written to be valid. An Oregon attorney would need to review yours to see if it is valid. Strictly speaking, a change in beneficiaries under a trust due to death is not quite an "inheritance". I don't know if that is relevant in this context, but makes me think there may be a problem with the clause. Also, most states have special safe-harbor procedures/statutes to request a "clarification" of the trust, not a challenge, which would not implicate even a well-written clause.

    As to the challenge itself, that is far more factual than we can get to here.

    Bottom line, see an attorney if the changes are so unacceptable to you to find out your rights. You might want to talk to dad too.
  6. #6
    anteater is offline Senior Member
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    A couple comments:

    At least in Oregon, accepting valuable gifts from elders is a crime under "elder financial abuse"...
    Do you mean this to be as blanket a statement as it sounds? Do you mean that, if we were in Oregon and my completely competent 85 year old Dad decided to gift his 1,000 shares of Apple to me, I would be committing a crime by accepting the gift?

    The Oregon statute dealing with in terrorem is awfully "hard." Most states provide exceptions for challenges made with some sort of good faith. Maybe Oregon case law softens this, but I can't comment on that.

    130.235 In terrorem clause. (1) Except as provided in this section, an in terrorem clause in a trust is valid and enforceable. If a beneficiary challenges a trust that contains an in terrorem clause that applies to the beneficiary, the court shall enforce the clause against the beneficiary even though the beneficiary establishes that there was probable cause for the challenge.

    (2) The court shall not enforce an in terrorem clause if the beneficiary challenging the trust establishes that the beneficiary has probable cause to believe that the trust is a forgery or that the trust has been revoked.

    (3) The court shall not enforce an in terrorem clause if the challenge is brought by a fiduciary acting on behalf of a protected person under the provisions of ORS chapter 125, a guardian ad litem appointed for a minor or a guardian ad litem appointed for an incapacitated or financially incapable person.

    (4) For the purposes of this section, “in terrorem clause” means a provision in a trust that reduces or eliminates the interest of a beneficiary under the trust if the beneficiary challenges the validity of part or all of the trust.
    Conceding that you may have reason to distrust your sister as successor trustee, are there other provisions that have changed?
  7. #7
    Cliff421 is offline Member
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    Thanks for the replies.

    First, this is not what's sometimes called an AB trust. This is your garden variety Joint Living Trust with identical desires stated, and everything jointly placed into the trust. The trust is titled similar to "The Joe Blow and Jane Doe Joint Living Trust." It is also known as a revocable trust, but obviously only during the lifetimes of one or both trustors and that's what I'm trying to figure out.

    Can Dad change the terms of the trust after Mom dies, when they had jointly agreed to uphold each others' wishes? I guess that's the bottom line.

    As for the "in terrorem" clause, Mom already died and left me her 1/2, without that clause. Even if it's a valid clause in Oregon, can Mom's instructions now be changed in that regard? They both owned an "undivided interest" in everything, so how can Dad, even without realizing it, change Mom's "will" and his agreement to uphold it?

    Can her wishes as to who's 1st ST be changed since Dad agreed with her and they jointly instructed it so, and she's not here to defend it?

    Thanks!
    Last edited by Cliff421; 04-27-2011 at 07:45 PM.
  8. #8
    Cliff421 is offline Member
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    PS I may be mistaken about the elder financial abuse gift thing. I just looked and it appears it might require fraud. Sorry about that.
  9. #9
    tranquility is offline Senior Member
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    Can Dad change the terms of the trust after Mom dies, when they had jointly agreed to uphold each others' wishes? I guess that's the bottom line.
    Unless the trust became irrevocable, yes.

    As for the "in terrorem" clause, Mom already died and left me her 1/2
    Not if it is a single trust unless there is a provision it became irrevocable on death. Only in the AB trust scenario would this be true.

    Even if it's a valid clause in Oregon, can Mom's instructions now be changed in that regard? They both owned an "undivided interest" in everything, so how can Dad, even without realizing it, change Mom's "will" and his agreement to uphold it?
    Because, it's not a "will" but a trust. The trust terms rule. But, are you sure it is not an AB trust plan? Unless it was written in the last year, that is the standard way for such trusts to be written to take advantage of the marital exclusion.

    Can her wishes as to who's 1st ST be changed since Dad agreed with her and they jointly instructed it so, and she's not here to defend it?
    Since no one would allow their money to be encumbered by trust rules without the power to distribute as they want (I would not have ascertainable standards for my money. If I want to go to Europe, I would want to go.), I'd say yes. But,
    No one can tell without seeing the trusts.
  10. #10
    anteater is offline Senior Member
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    It is also known as a revocable trust, but obviously only during the lifetimes of one or both trustors and that's what I'm trying to figure out.
    This is kind of a contradictory statement. You use the word "obviously" and then say that you are trying to figure it out. What does the trust document say? To me, it would not make sense to have a joint trust restrict the actions of the surviving spouse.

    Mom already died and left me her 1/2...
    I think you said this before and it is still puzzling to me. What does it mean? Again, it is just very puzzling to have a joint trust and then say that one trustor has left one beneficiary something when that trustor dies and the other trustor is still alive.

    Can her wishes as to who's 1st ST be changed since Dad agreed with her and they jointly instructed it so, and she's not here to defend it?
    Again, you are talking about "her wishes." But it is a joint trust.

    I know some law in some states regarding joint wills and under what circumstances a joint will is contractual. But I don't know Oregon and whether the same reasoning applies to joint revocable trusts. I have to agree with what Tranquility said in his last sentence: consult with an Oregon attorney.
  11. #11
    Cliff421 is offline Member
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    OK, Thanks. I'm hearing all of you and I think I have only two choices because it sounds as if the new revocable joint living trust, even though it still has Mom's name on it but not her signature, may be valid.

    It's frustrating that my sister added the clause about losing all inheritance if it's challenged. She's just like that. She googled and found that.

    So, I think my choices boil down to:

    1. My sister lives 500 miles away and comes here only once or twice a year and stays with Dad for a week. Dad trusts my judgment more and my first effort will be to explain to him that what my sister did wasn't what Mom wanted and wasn't what he wanted originally. I'll have exact copies of the original except for Mom's signature spaces, and see if I can get Dad to go with me and sign a new one before a notary. I have a good chance at that. He still thinks and knows that I'm the better business person and that I'm local to handle things. He will also understand that he was tricked and didn't know my sister was doing all of that.

    Then when my sister comes down I'll have Dad instructed to not "change what he and Mom agreed to" (they were happily married for 68 years and he misses her horribly) and spend a ton of time there while the sister is here.

    2. I hate to say this, but get Dad to resign as trustee and appoint me trustee now, and appoint me trustee after he passes, and then keep all of the docs myself and not tell my sister. Ugh. Still, hang around there during the day when my sister comes so she can't take him any place without me going.

    3. Get Dad so convinced that what he and Mom decided was right that he'll change it back and tell my sister "no." That's a real possibility since he knows my sister is greedy and might not play fair, and he knows I would.

    4. After I get it changed back, get Dad declared incompetent. I'd hate that, but being 94 he has 2 strikes against him. He lost his driver's license and can't get it back to his great anger because he can't pass either the written or driving test. He can't read the paper anymore because his mind wanders and he puts it down. Verbally he's pretty sharp, but his short term memory is shot.

    I'll get it fixed somehow and I think the earlier suggestion of going to Dad with this is best. I think I can win him over.

    Thanks, all for letting me know the new trust may well be valid.

    Cliff
  12. #12
    curb1 is online now Senior Member
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    What did your sister say when you asked her why she did this? You need to straighten this out between you two instead of yanking your father back and forth. There appears to be more to this story than has been presented.
  13. #13
    anteater is offline Senior Member
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    Quote Originally Posted by curb1 View Post
    You need to straighten this out between you two instead of yanking your father back and forth.
    Well put, curb.

    I asked but did get an answer to: Other than the change in successor trustee and the in terrorem provision, were there other changes?

    Two points:

    1) The successor trustee does not have carte blanche. And the courts are there to rein in a rogue trustee.

    2) The in terrorem provision is not a "get out of jail free card" for the trustee. Improper administration can still be challenged.
  14. #14
    Cliff421 is offline Member
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    Quote Originally Posted by curb1 View Post
    What did your sister say when you asked her why she did this? You need to straighten this out between you two instead of yanking your father back and forth. There appears to be more to this story than has been presented.
    There is more but I didn't know if it was relevant. A granddaughter of my Dad's who is mentally ill (demonstrably and clinically) tricked my Dad into making her the current trustee and successor trustee without the knowledge of either my sister or me. That started the mess.

    I was way out of town for a long time and my sister came down from 500 miles North to "fix it." The agreement between my sister and me was that she would get Dad to his attorney and get it restored to as it had been and should be.

    My sister cheated me and drafted the new trust herself and changed the successor trustee to herself and added to the trust to benefit herself, as mentioned. She took Dad to a notary and to the bank. When I saw a copy and about fell over, I email her and all she said was "Dad wanted it that way."

    BS. He can't read and comprehend it fully. He couldn't define first successor trustee.

    I have already asked Dad and he knew nothing of that but he HATES family fights and is by nature passive in addition to being a bit senile and very sentimental. He would hate to see my sister and me fighting.

    So, here I am. Dad has declared that when my sister comes back down the second week in June we are going to have a family meeting and settle this.

    Now, Dad is 94 and was hospitalized last week with his second heart attack and I'm worried about what might happen between now and June. I'm also not convinced I'll prevail with Dad in June although odds are I will. My ace in the hole is "This is the way it was when Mom died Dad, and this is what she wanted. This is what you and Mom agreed to, Dad. This is what Mom expected to happen, Dad."

    So, I opened this thread wondering where I stand right now if Dad dies in his sleep tonight, or if I don't prevail with Dad.

    Quote Originally Posted by anteater View Post
    Well put, curb.

    I asked but did get an answer to: Other than the change in successor trustee and the in terrorem provision, were there other changes?
    Thank you. Yes. There is now a clause that the trustee can receive "reasonable compensation." I really don't have a problem with that and it may be a necessity if a non-family member has to do it because both my sister and I for some reason are unable to serve.

    There is also a clause that lists all previous versions and states that this new document supersedes them. It of great interest to me because about a year ago when Dad was really ill in the hospital, his attorney who has known both Dad and me personally for 30 years brought his secretary/notary to the hospital and had Dad sign to make me immediate trustee. It was supposed to stay that way until 1.) Dad very much improved or 2.) Dad passed away.

    Then the granddaughter tricked Dad.

    This new clause my sister added that lists all past versions and negates them fails to list the one where I was actually the trustee just before that. I have no idea if that has any significance. I've been operating under the assumption that any latest date notarized, verifiable version would rule anyway. ??

    Please let me restate. I was actually the trustee and 1st ST right up until the granddaughter tricked Dad. Dad was doing great so my sister and Dad and I agreed to restore him to trustee which he likes. Now last week another heart attack and hospital.

    Two points:

    1) The successor trustee does not have carte blanche. And the courts are there to rein in a rogue trustee.

    2) The in terrorem provision is not a "get out of jail free card" for the trustee. Improper administration can still be challenged.
    Thanks. That does help with my concerns.
    Last edited by Cliff421; 04-28-2011 at 12:39 AM.
  15. #15
    Cliff421 is offline Member
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    In case it matters, yes I have his full blown power of attorney and an advanced health care directive putting me in charge, both notarized and valid.

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