removing a name from a trust?

[Justaguest]

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

I don't think my original post was quite compete. My parents had a trust drawn up about 10-12 years ago. I am the trustee, and it was my understanding that I was to equally divide the profits of the sale of the house and any assets between me and my siblings after my parents have passed. One of my siblings borrowed a large sum of money from my parents and is now refusing to pay it back. The amount borrowed is close to what he would receive from the assets. My mother would like me to just not include him when assets are divided. Can I do that? I'm almost positive that it is an irrevocable trust, so I don't believe we could have a lawyer just remove his name. Please advise, and TIA for any help.

 

[curb1]

You said, "I'm almost positive that it is an irrevocable trust, .....".

You need to find out.

 

[Justaguest]

yes, it IS an irrevocable trust, and specifically gives 25% per stirpes to the sibling in question.

 

[tranquility]

That that is in the trust is gone. It was already given away and the beneficiary is the one who owns it. (He just might not control it.)

If the trust is not yet funded, the assets don't have to go in.

(I'd check again. Usually an living trust becomes irrevocable on death of the grantors. If your parents are alive and the trust owns their house, I suspect it is a revocable trust.)

 

[Justaguest]

pg. 1 of the trust includes this: "hereby irrevocably assigns to the trustees", although only 1 trustee is named.

 

[TrustUser]

hi justaguest,

if the assets were deposited into an irrevocable trust, then there is nothing you can do about that, legally.

the cash borrowed from the parents should not have come from the irrevocable trust, since it was no longer owned or controlled by the parents.

so i am assuming that the borrowed cash came from funds outside of the trust ?

so if there are still assets outside of the trust, there is one solution that could at least partially deal with the problem.

and that is that a second trust could be set up. the child who borrowed the money would not be included as a beneficiary in this trust. and then the trust could be funded with assets not in the irrevocable trust.

think of it as 2 separate pots of gold. one pot is that which is in the irrevocable trust. the other pot is everything else.

and from your post, it sounds as though your parents (at least your mom) are still living. which means that the other pot can still continue to grow.

if the child is not willing to pay back the money, i think this is the simplest solution.

and another good example of why it is VERY SELDOM a good idea for parents to set up irrevocable trusts.

as tq stated, a typical revocable trust becomes irrevocable when the parents are deceased.

 

[Justaguest]

thanks for the info!