Husband dips into deceased wife's living trust

[4afriend]

Trustee violates terms of living trust

Situation:Husband and Wife establish equal revocable living trusts. When one dies their trust is frozen until the death of the other. The survivor is the trustee and can use assets in the frozen trust only for medical purposes and only if/when survivor depletes all assets in their own trust.

Monthly dividends and interest earned from investments are to continue to equally go into both trusts.

Wife dies. Husband remarries. After 2 years of second marriage husband gives power of attorney to daughter because husband/father loses control of his trust to his 2nd wife who is using up large sums of money while trying to keep childen of husband/father out of the picture.

A 2nd daughter and son are the three who will benefit from the deceased wife's frozen trust and also stood to benefit from husbands trust upon his death. They have no blood relation with 2nd wife.

Into the 4th year, husband starts to develop demencia and 2nd wife puts him in senior care facility. Son immediately takes him out and moves husband/father in with him.

Daughter discovers no monthly dividends or interest earned have gone into deceased wifes frozen trust throughout course of 2nd marriage amounting to $500,000.00 (plus)

A current will (written when husband/father was of sound mind and body directly after 2nd marriage) says 2nd wife shall maintain a lifestyle she is accustomed to which is about $3,900.00 a month and is to receive all monies in checking accounts at time of husbands death.

QUESTION: Holding power of attorney, can daughter transfer money out of joint checking account (Husband and 2nd wife's joint account which holds over $200,000.00 and where monthly dividends are deposited) into 1st wifes frozen trust and,

Holding power of attorney, can daughter sue husbands/fathers estate for the remainder owed to 1st wifes trust?

The 2nd wife inquired on husbands condition only once (at the 7th month point) in the year he has lived with son and it was by telephone. In that year, husband/fathers condition has deteriorated and Alzheimers has recently been diagnosed. The attorney handling the estate leans to the side of the 2nd wife and asking him any questions will tip off 2nd wife of all actions considered.
A new attorney will be retained but effected parties need to know now what can be done.

 

[advisor10]

2-25-2002

DEAR 4AFRIEND:

Go to the library and check out 1-2 books on trusts to inform yourself about how revocable living trusts operate,

OR,

Please consult with a local trust attorney to get your questions answered and come up with a strategy to rightfully claim these monies.

Daughter might be able to claim the money with the power of attorney, but it would also depend on the bank policy and how the account signature card is made out at the bank (is wife or daughter named as a beneficiary(after his death) on the account, or the bank might require the wife's signature approval on any amount taken out, which she obviously would not agree to). Power of attorney expires at the exact moment that the husband/father dies, so if daughter wants to claim this money she better do it before he dies and not afterward, when the wife will automatically receive what is left in this account due to the concept of joint tenancy with rights of survivorship.

Daughter could also sue the wife (as trustee), for the remainder owned to 1st wife's trust, but attorney fees would be costly. A better solution might be to have your attorney file a motion in probate court (or wherever) to get the 2nd wife removed as trustee due to her breach of fiduciary duty, if you are able to prove definitively that she failed to deposit the monthly dividends or interest (which would also be her illegal disobeying of the explicit instructions of the trust).

SINCERELY,

advisor

 

[4afriend]

thankyou so much. I have already done what you suggeted and am trying to "smarten up" on trusts. I checked out 2 books. Living trusts made simple and brain surgery made simple. (laugh). Your info is most appreciated. If I may ask your opinion of the following strategy:

Father throughout lifetime made frequent loans to children which were religeously paid back. What if daughter with power of attorney authorized loans to all three children...say $200.000.00 each.

Repayment terms would be one balloon payment from each and due when 1st wife's frozen trust was made available to them. At that point husband would have died and they would receive at least that amount from his trust and substancially more from the frozen one. Clever? Possible? Consult the conservative attorney?

Oh with interest of course and formally done. Thankyou so much again.