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Irrevocable Trust

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G

gvgertie

Guest
In 1999 my parents visited an estate planner who set up their wills and an irrevocable trust. I am the trustee. My father passed away in Sept. 2000 and I am in the middle of trying to sort this all out. We all reside in the state of Idaho.
In my father's will, all of his personal property was left to my mother and all other assets to the trust. These are my questions:
1. In the trust document, the asset list is blank. My parents jointly owned several businesses which had been sold. They carried the paper in escrow and there is still monthly income from these escrows. Since these businesses were jointly owned, does the income go into the trust or to my mother? Since Idaho is a community property state, would these go to my mother, does it all go into the trust, or does my father's half go into the trust?
2. Who and how is it decided what goes into the trust? Why wasn't this done at the time the trust was set up? Does this mean there is no trust because there is nothing in it?
3. The will states that the trust is revocable but the trust document itself says irrevocable. Is this a typo or is there a reason for this?
4. What is meant by the trust failing?
5. If the assets are less than $675,000 does that mean that there is no trust? I know that there would be no tax benefit, right?
6. The trust states that the grantors cannot benefit from the trust. Is my mother left with no income?
I know this is long but I am really in a quandry! My father had brain cancer and he had expressed a concern about this shortly before he passed away but wasn't in any condition to find out more about this. He thought he had really messed up by setting up this trust. His whole reason was to take care of my mother, and my sister and I both want her to have everything she deserves. My parents worked hard and long all their lives to build a good retirement for themselves. I don't want to see my mother living on social security only. Is there anyway to make sure she gets the income from these assets?
Thanks for your help!
Kathy
 


ALawyer

Senior Member
First my condolences on the loss.

It sounds as if your parents had someone do what was supposed to be a sophisticated estate plan, but whoever did it either did not follow through or may have been more than a bit sloppy.

If the estate plan was done by an attorney, the first step is to go to that attorney and ask for an explanation. You asked a series of good, straight questions. If you do not like the answers you get, or the attorney is hedging and defensive, or explains why there is a big tax if there was not supposed to be one, then go to another attorney at a law firm experienced in estate planning. Fast.

If the estate plan was done by non-lawyers, or your parents used a "do-it-yourself" approach, then go to an attorney at a law firm experienced in estate planning now. Faster.

A good lawyer can straighten out most messes, even though it starts to cost far more to straighten things out than it would have been to do them right in the first place.

As far as the $675,000 that is where Federal estate tax begins in most cases. (If there were lifetime gifts it could begin at a lower point.) It has no bearing on the validity of a trust.

As far as your mother being left destitute on Social Security, that should not happen. You and your sibling could probably disclaim, or gift her money or do something -- even if it required a court to permit the reformation or even setting aside of the trust on the grounds of mistake.
 

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