Revocable Living Trust: How many trustees (max)?

[Diggler]

What is the name of your state? Pennsylvania

I need to make a revocable living trust. Ultimately, I would like for myself, my wife, and my two sons to be trustees of the living trust. My sons are not of legal age yet, but let's assume that I will add them when they do reach legal age.

I have heard (not by anyone of authority, though) that there can only be a maximum of two trustees. Is this true?

I am only interested in whether this is legal... and not in discussing whether or not it's a good idea to have more than two people involved in the decision making processes of maintaining a trust.

Thanks!

 

[tranquility]

I know of no limit of the number of trustees. However, why? Why would you want your kids to have any say over your assets? I can see it now in a poorly worded trust:

"Let's have a vote! Mommy and daddy think we should save all our money for your college education. Billy, timmy and cindy all think we should buy an ice cream mountain and go sledding! Well, by the terms of the trust the kids win. Ice cream for everyone."

Put your kids down as successor trustees after they reach majority. If you are even thinking along these lines speak to an attorney to draft the trust and he can word the trustee and successor trustee section in a way which will accomplish your goals. In a revocable living trust, you don't want anyone else but you (and your wife) to be trustees. What possible reason do you have?

 

[Diggler]

Thanks for the input. Again, I don't care to get deeply into the 'why,' but it IS necessary in my case. Suffice it to say, there is not going to be any money involved in this trust, only a few titled items that need to be owned by the trust so that everyone in the trust is 'owner' of the items. I WOULD use an LLC to do this but I am concerned about the possibility of annual fees in the future being tacked on, and I don't need any tax complication since this isn't a money-generating venture. In this case, it is simply a requirement to have true concurrent, joint ownership between four people for several titled items.

 

[seniorjudge]

You should have one trustee. If that trustee cannot or will not act, then there should be a successor trustee named. You could have a third successor trustee named also.

Having more than one trustee is asking for trouble.

If you cannot trust a person to be a trustee, then appoint a corporate trustee.

 

[tranquility]

I see a lot of people who create a lot of trusts. I read a lot of things describing a lot of trusts including some ABA listservs were hundreds of attorneys write thousands of messages about issues and asking for help. I've done this for years and years. Your secretive nature regarding this "need" for concurrent owners makes me thing you are tying to protect assets in some fraudulent way or have a serious misunderstanding about what you "need" or can do through a trust. Maybe I'm wrong. But, I advise you to see an attorney knowledgable in trusts. Trusts are a powerful tool which can accomplish many things. I bet you can accomplish your secretive goals in another way (unless we are talking about a fraudulent asset protection scheme or tax avoidance scheme) without the risk you seem to dismiss.

See an attorney who you can tell your secret plans to so he can advise you accordingly.

 

[seniorjudge]

Thanks for the input. Again, I don't care to get deeply into the 'why,' but it IS necessary in my case. Suffice it to say, there is not going to be any money involved in this trust, only a few titled items that need to be owned by the trust so that everyone in the trust is 'owner' of the items. I WOULD use an LLC to do this but I am concerned about the possibility of annual fees in the future being tacked on, and I don't need any tax complication since this isn't a money-generating venture. In this case, it is simply a requirement to have true concurrent, joint ownership between four people for several titled items.

This is a recipe for disaster, human nature being what it is.

 

[Diggler]

Nothing I am doing is fraudulent, illegal or attempting to hide assets.

I am a collector and I am buying some titled firearms which can only be possessed by the title holder. The monetary value of them is relatively insignificant. Selling them off is a somewhat complicated process that negates the 'danger' of my family screwing me over with them. And the monetary value wouldn't make anyone rich; they'd be further off pawning the furniture in the house.

Possession of these items by anyone other than the title holder is a felony. Possession in this case is defined as 'capable of having access to,' not just having them in your hand. So, if they are titled to me only and my wife has the ability to get into the safe, I would be guilty of a felony. Therefore, I want to avoid the scenario of having them be only 'mine' and my wife (and children, when they are adults) unable to 'possess' them when I'm not around. Especially since I keep our important documents, my wife's jewelry, etc. in the safe. My sons' hunting rifles are also kept in the safe, and when they are old enough to hunt on their own they will need access to the safe as well.

The titles can be to an individual, a corporation, an LLC, or a trust.

I can easily do this using an LLC, making everyone into an officer but wish to avoid the unrelated corporate paperwork, tax concerns for all the 'officers' and the possibility of annual corporate fees being imposed in the future by the state. A trust is perfectly legal for this, and would simplify this greatly. I could set up a trust with all of us being trustees, we would own them as a group and any one of us over the age of 18 who are not otherwise disqualified from possession would be able to access my safe. Many people are doing this already but are at the most are using a husband/wife trustee, and think that two is the maximum number allowed. If I can't have four trustees I'll be forced to go the corporate route, but I don't really want to do that.

I was speaking in general terms in order to find out if the simple thing I wanted to do was possible, without introducing others' possible political biases into the discussion.

 

[tranquility]

Basic general theory of trusts do not have a limitation on the number of trustees. However, you are making a specific application of a trust. Your problem is not with trusts in general, but if the form of the trust qualifies for the use you want. Your question is not a trust question, but a question for an expert in the type of firearm trust you envision. That's why the questions and facts are important, the answer to the question you asked in the beginning (and now) doesn't help you.

 

[Diggler]

Actually it does help me; there is not specific type of trust that needs to be used for this. The regulations are quite clear that the ownership can be by an individual, corporation or trust. A trust... any type of trust... can have ownership, and the active trustees do have concurrent rights of possession. Beneficiaries do NOT have the right of possession until they inherit the items through the death of the grantor. There are a lot of people doing this with trusts set up with one or two trustees and there is no problem with it at all. The problem comes when some people want to use things like Willmaker, make it for two people, and then add more names to it as trustees before getting it notarized. If the TRUST ITSELF is found to not be legally formed (such as having too many trustees, IF that was an issue), then the people involved may find themselves in a heap of trouble since the trust would have never been valid and everyone in the faulty trust could find themselves charged with illegal possession.

So, as long as the trust itself is legal and recognized as a legitimate trust, there is absolutely no issue with what I want to do. In other words, if the government looks over the trust documents and says, "Yep, the John Smith Family Revocable Living Trust is a valid, existing trust" and it has four people as trustees, then that's all I need it to do. Just be a valid trust.

 

[tranquility]

A trust... any type of trust... can have ownership, and the active trustees do have concurrent rights of possession.

While I don't express an opinion in the specific instance you are talking about, this is not a true statement.

Beneficiaries do NOT have the right of possession until they inherit the items through the death of the grantor.

This may or may not be true depending on the wording of the trust. Also, the "possession" you speak of here is a property term which may or may not be related to "possession" in a criminal sense according to specific statutes.

In other words, if the government looks over the trust documents and says, "Yep, the John Smith Family Revocable Living Trust is a valid, existing trust" and it has four people as trustees, then that's all I need it to do. Just be a valid trust.

This is such an ignorant statement, or stupid based on prior conversations, that I am done. My understanding of a valid trust is:
1. Intent to create trust.
2. Trust property.
3. Beneficiaries.
4. Written instrument. (Even here there are issues related to oral, constructive and other trusts.)

Knock yourself out. Give us a call when the government comes knocking and let us know how it turned out.

Info edit:
There could be problems with the validity of a trust, see merger, rule against perpetuties, rule of shelly's case are three which come to mind. You would probably worry most about merger.

 

[msiron]

So, if they are titled to me only and my wife has the ability to get into the safe, I would be guilty of a felony.

This is NOT necessarily true, (unless your wife and kids are felons, and then guns could not even be in the same household) Have your wife get a permit, and you children if they are old enough. You should speak with an attorney who specializes in firearms defense.

added this. Are you a Curios collector?

 

[Diggler]

tranquility;

I think you misunderstood from which angle I was looking at the situation. I am looking from the side of the firearms laws. They are not specific as to what trust can be used, as long as a trust exists, that trust can be the 'owner' or holder of the title as long as it's capable of it. In my case I want a revocable living trust. I am not referring to anything regarding the quirks of trust law except to get four names listed as trustees, in a valid manner, on a revocable living trust. Once that happens, the 'possession' laws... from the firearms viewpoint... are a moot point. The trust is just an alternative way to hold title to the items.

Regarding the beneficiaries, again, I'm looking at it from the firearms laws point of view, not trust law. By possession, I'm saying that it is illegal for a beneficiary to possess the firearm unless the trustee is present.

Lots of people are doing similar things already; I won't have the government knocking on my door because I am going to do it right the first time and completely legally.

msiron: Yes, I am a curio & relics collector. My family aren't felons and already have 'access' to my normal firearms. The firearms I'm referring to are NFA items, which CAN'T be possessed by anyone except the title holder, or at least with the title holder present (you can use the items while I'm standing there).

I am planning on either having a real estate lawyer draft the entire RLT, or at least review and approve a pre-made one from Quicken Willmaker. This isn't an area where I'm going to take a chance on it, but I didn't want to waste time and money on a lawyer unless I was sure I could do it.

 

[msiron]

As a Firearms Arms Instructor I am telling you if you died, the remaining spouse, or legal aged person left in your household with possession of said firearms..... has so many days (my state, if remember correctly it is 90 days) to hold onto the firearms and then must acquire the proper permitting so they are legal. After that period if the remaining person has not or could not qualify for said permitting they must be turned over and sold through an FFL dealer or C&R holder (if they qualify as C&R firearms), which as you probably know do not have to go though an FFL dealer.

And I do understand what your saying but families living in the same house hold are not the same as robbers off the street but of course you would keep your arms locked up (reasonable) or carry on you.

 

[Diggler]

Understood... but NFA items are a completely different animal. The law DOES treat my family as 'robbers off the street.' If I have NFA items that are titled to me in the safe and my wife is ever found to be able to access the safe (knowing the combination, a key laying in the house), I am now eligible for a 10 year prison sentence and $250k in fines.

I will be talking with my accountant this week about LLC's and depending on how that goes, I'll go see a lawyer regarding a revocable living trust. If I can get a valid RLT drawn up that will allow me to have more than two people listed as trustees, I'll be in good shape... otherwise I'll just form an LLC and be done with it.

 

[msiron]

Understood... but NFA items are a completely different animal.

Oh yes, yes I see.