Question on trust property

[Todd T]

Illinois (residence) Missouri (trust law)

ON EDIT:
We have been drug into a situation where my wife is the Co-trustee with her older brother on her mother's Inter Vivos Trust.

My mother in law (MIL) who is the settlor and trustee of her trust has designated a couple of her children as transfer on death beneficiaries on her vehicle titles. She has a savings account for one child which is to pay on death to him. She also has an annuity with three (5 total) of the children as beneficiaries.

From what I gather from the trust the _Settlor_ (mother in Law) has given up all worldly property to the trust (vehicles, personal property, money accounts etc) and these items now belong to the trust? YES/NO?

Question: If that is the case, even though the vehicles, savings accounts and checking accounts have POD beneficiaries do they still belong to the trust and would have to be administed through it's terms as to what happens to them and how they are distributed?

What about the annuity? does it belong to the trust too?



The article (Article II) that covers this in the trust states; "Notwithstanding any of the trusts and powers herein declared, the Settlor may, by written instrument executed by the Settlor and filed with the Trustee, revoke, alter or amend this agreement at any time, or withdraw from the trust estate, be discharged of the trust, the whole or any part or the principal and accumulatedincome upon paying all sums due to the Trustee and indemnifying the Trustee against liabilities...." its confusing because she is to be able to take things out of trust and do what she wants but how do you keep record of what was removed by her and what is to remain a part of the trust if she is the settlor and trustee.

with that said; she has a file folder with things in it that state XX get the car, XX get the truck, XX get the savings account, XX gets the boat.

Is this the record the Co-Trustees would go by when adminstering the trust? would this be the written instrument executed and filed?

 

[tranquility]

Re-read your post with the mind set of a person who has no idea of your particular facts beyond what is written. I can understand very little of what you wrote. However, most of the questions have to do with the terms of the trust. No one can advise you unless they see the trust and apply a specific knowledge of the facts to it. See an attorney, bring the trust and answer his questions. Don't tell him what you want to tell him, answer his quesitions. Once he gets a sense of what the situation is, then you may ask your questions. If you try to explain things to him the meeting will take hours. Let him bring the information out of you and direct the consultation.

 

[Todd T]

We've already planned to consult an attorney and thanks for the advice on how to conduct that meeting.

from above, boiled down.

1. can you confirm yes or no: Can she (MIL) as both the Sole Settlor and Trustee remove items from the trust at her leisure?

2. if so and she takes property out of the trust while she is still alive, is that property no longer a part of the trust and not considered a part of each child's 5th?

I'm just trying to figure out if my wife and I should be keeping record of what her mother gives away and to whom while she is still alive.

 

[StuckOnStupid]

Todd T, I read and re-read your first post and cannot determine if your Mother-in-Law is alive or dead?

Assuming she's alive and NOT incapacitated she can do as she pleases with her property and her trust. It's none of any one's business what she does with her stuff as Settlor and Trustee of her own trust. When she dies the trust becomes irrevocable, only then does the successor trustees have any power to act.

Regarding your other issues the trust ONLY controls property that is titled in the name of the trust. Example, bank account titled; Mother-in-Law Trust, dated 00/00/0000, Mother-in-Law trustee.

The answer to your statement,

(" From what I gather from the trust the _Settlor_ (mother in Law) has given up all worldly property to the trust (vehicles, personal property, money accounts etc) and these items now belong to the trust?")

is absolutely NO!

POD accounts will only be paid to the named beneficiary on that account, if living.

The annuity death benefit will ONLY be paid to the beneficiaries named in that contract.

The separate writing you describe as: (she has a file folder with things in it that state XX get the car, XX get the truck, XX get the savings account, XX gets the boat.)

That is a HUGE problem for those types of property. Those are titled assets, not just mere tangible personal property items such as the TV or the coffee table. The primary purpose of having a trust is to avoid the Probate Court System, by leaving titled assets outside of the trust in Mother-in-Laws name as an Individual Sole Owner will trigger Probate Court upon her death and thus defeat the very purpose of having a trust in the first place.

If Mother-in-Law is alive she needs to properly FUND her trust.

If she's dead....welcome to the Probate Court System and shame on the attorney or financial advisor who didn't clearly communicate to Mother-in-Law the absolute necessity of funding i.e. simply re-titling all property into the name of the trust.

Regarding this statement..."its confusing because she is to be able to take things out of trust and do what she wants but how do you keep record of what was removed by her and what is to remain a part of the trust if she is the settlor and trustee."

Again, IT'S NONE OF ANYONE'S BUSINESS WHAT SHE DOES WHILE SHE IS ALIVE AND THE SETTLOR AS TRUSTEE DOES NOT HAVE TO ACCOUNT TO ANYONE.

Edit: Okay, I can see from the second post Mother-in-Law is in fact still alive. Mother-in-Law can do as she pleases. Don't bother taking the trust to an attorney. You DO NOT have any "legal" standing while the Settlor as Trustee is alive, UNLESS she becomes incapacitated or adjudicated incompetent.

 

[tranquility]

I generally agree with StuckOnStupid's answer. I add that only the trust can tell you if mom can remove things at will. Most are designed so she can, but the co-trustee may have the ability to object. Most people who have a trust like this also have a "pourover" will where any property outside of the trust at death goes into the trust for distribution. This does not have the advantage of avoiding probate, but prevents problems in distribution. Finally, funding of the trust is an issue with many life trusts. People forget this step or don't do it correctly or refinance a property and forget to put it back in the trust, or whatever. Trust assets are owned by the trust to be done with as the trust says. If the trust says mom can take things out, then she can take things out.

 

[Todd T]

Thanks for viewing

Very good info, both of you!

Mother is still alive and we are caring for her (she has cancer but is in good spirits). there is one child who is stirring the pot and trying to control her assets so we are just trying to do some housekeeping on the trust while she is still able.

It sounds to me like she has not properly funded the trust with her some of her assests. I know the house is titled to the trust but its being sold on the 4th of april. She instructed my wife and I to deposit the proceeeds from that into her investment fund which also belongs to the trust. (AND get a receipt).

The vehicles are another matter and we'll address that with her.

She has asked to see an attorney and we are arranging that for her.

Again,
Thanks