as trustee of my own trust, can I terminate trust?

[scriptwiz05]

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

Okay, heres my situation. Im the trustee of a trust that has 300k in it as well as a house valued at around 150k or so. There are three beneficiaries, myself, and my two younger brothers who are twins. The trust was set to expire when we each hit 40. Im 36, they are 31. Im also trustee of my dads estate which has more money and properties in it but Im not concerned with that right now. I want to know if Im able to just terminate this trust.

My brothers live in the house that is also part of the trust. over the past few years, each of them have had the police called to the house several times from several different women regarding domestic violence. Most recently, one was on the news because his gun went off when he was drunk and the bullet fragments hit a girls foot. Im really afraid that its only a matter of time until one of these women pursue a civil suit and wipe the trust out since the house is in the trust. Putting the house in their names solely is not much of an option as Im afraid they would then refuse to buy me out and Id rather not waste the time and legal fees pursuing this matter. Id also not rather just boot them and put the house up for sale as its a lot more trouble than its worth as the house is in sub standard condition and the house is the one thing they have been working on trying to improve.

So im willing, if possible to see if I can just write them the check for their money so they can buy me out of the house, take my 100k out of the trust as well and invest it. This way if one of these idiots do catch a civil suit, all they can do is take the house since it will be the only thing left in the trust. If we are the only beneficiaries to this trust and we all agree its best to go this route, is there anyway I can get in trouble down the line? many thanks in advance.

 

[scriptwiz05]

ok i did a little research and it seems a little too easy to believe. I read that i dont even need to contact the courts? All I have to do is send a letter of resignation the the beneficiaries within thirty days of resigning. It says I need to transfer the assets and thats it? Does this hold true even for a trust that has not hit the expiration date? I want to make sure my brothers cant sue me one day for giving them their money early, having them blow it, and then suing me for my share citing that they were too young to have this money, or some other excuse. We have a probate attorney but it seems each time we have to go to court for something, the bill is upwards of 3k so im trying to see if I can legally avoid that route. thanks again for any help/advice/suggestions.

 

[tranquility]

No, you can't just terminate the trust. You have the fiduciary duty to follow the trust's terms. If you violate that duty, the other beneficiaries may sue you even though they agreed.

As to the house, what did the house do wrong? No one can sue the house. Of course, it needs to be properly insured inside the trust. The concern is one can sue the person who caused damages. They cannot get more than what that person has a right to in the trust.

Reading edit:

I want to make sure my brothers cant sue me one day for giving them their money early, having them blow it, and then suing me for my share citing that they were too young to have this money, or some other excuse.

That is precisely what they would sue you for. And, they would win.

 

[FlyingRon]

We can't possibly give the answer with out knowing what the trust says. More than "terminating" the trust, the question is are you free to remove the assets from it. That is going to have to take someone (preferably a lawyer) to read the trust. In the trust that will be established for my two kids on my death, my daughter will have full control of her trust. My son's will be set up as a spendthrift trust and disbursements to him will need to be approved by a trustee (which is not him).

 

[scriptwiz05]

No, you can't just terminate the trust. You have the fiduciary duty to follow the trust's terms. If you violate that duty, the other beneficiaries may sue you even though they agreed.

As to the house, what did the house do wrong? No one can sue the house. Of course, it needs to be properly insured inside the trust. The concern is one can sue the person who caused damages. They cannot get more than what that person has a right to in the trust.

Reading edit:
That is precisely what they would sue you for. And, they would win.

ok I wanted to be sure of this. I wasnt sure If I could be sued for my assets as my money is in the trust along with the house. So even if god forbid, one of my brothers hospitalizes or worse someone someday, all the girls family could do is sue him for his 100k ?

 

[scriptwiz05]

We can't possibly give the answer with out knowing what the trust says. More than "terminating" the trust, the question is are you free to remove the assets from it. That is going to have to take someone (preferably a lawyer) to read the trust. In the trust that will be established for my two kids on my death, my daughter will have full control of her trust. My son's will be set up as a spendthrift trust and disbursements to him will need to be approved by a trustee (which is not him).

the trust does not say what to do if a trustee resigns. Before I was named as trustee, my father had three different people listed as trustees who all declined. there was no mention of me being trustee but my lawyer drafted some letters and we presented them to court allowing me to be the trustee. All the will states is that the trust expires when we each hit 40. I just didnt know if there was a way I could choose to resign. It just feels like im babysitting two 31 year olds and I grow tired of all the incessant calls for lawyers, bail bond money, court appearances, etc.

 

[tranquility]

ok I wanted to be sure of this. I wasnt sure If I could be sued for my assets as my money is in the trust along with the house. So even if god forbid, one of my brothers hospitalizes or worse someone someday, all the girls family could do is sue him for his 100k ?

Yes. Not only that, they can only get what the beneficiary has a right to get. Say brother gets sued and loses. But, brother cannot get a distribution for ten years. The judgment creditor could not get anything until it was time for the distribution. It is part of the theory behind the spendthrift trust flyingron mentioned. Now, say you distribute now with the full agreement of the brothers. Then, one brother gets sued and all the distribution gets taken. He could then sue you as he would not have lost the money if it had not been improperly distributed. Now, I don't know what the damages would be in that instance. But, there would certainly be some.

 

[anteater]

So... You had an attorney involved and been to court already. Why not consult with that attorney about gaining judicial permission to distribute the assets and dissolve the trust? Are the brothers likely to have any objection to that?

 

[scriptwiz05]

So... You had an attorney involved and been to court already. Why not consult with that attorney about gaining judicial permission to distribute the assets and dissolve the trust? Are the brothers likely to have any objection to that?

not at all. in fact, they have been hounding me for it since they got their first 100k at age 30 (little over a year ago), and have already gone through it on lawyers, bail bondsmen, cars, plastic surgery, hookers, etc., hence the "it feels like im babysitting" comment. I didnt want to go the court route because it seems like it would be another 3k bill and with they way they burned through the money, it seems certain that it would be denied. I cant believe I cant just resign. I mean what if I died tomorrow? there is no successor trustee. The money would just sit for ten years? But at least as long as I cant get sued over one of their activities, that's a start. Im just so tired of constantly being called every other day at 2 in the morning because the cops are there or they totaled another car. It feels like I have 2 extra kids in addition to my own. I didnt know it was going to be this much trouble. And Im trying to be the good brother and help them each time they call but I feel if they had their cash, they wouldnt have a reason to call me when they screwed up. If they burned through this second hand of cash, the calls would stop as well as they know I would never give them a dime out of my own pocket. they just keep calling for theirs.

 

[scriptwiz05]

Yes. Not only that, they can only get what the beneficiary has a right to get. Say brother gets sued and loses. But, brother cannot get a distribution for ten years. The judgment creditor could not get anything until it was time for the distribution. It is part of the theory behind the spendthrift trust flyingron mentioned. Now, say you distribute now with the full agreement of the brothers. Then, one brother gets sued and all the distribution gets taken. He could then sue you as he would not have lost the money if it had not been improperly distributed. Now, I don't know what the damages would be in that instance. But, there would certainly be some.

This puts me at somewhat of an ease. thank you.

 

[tranquility]

While you can resign, you can't "just" resign. When you took over as trustee, you accepted some duties of trust. You could always go to court to get another appointed.

 

[Zigner]

I suspect you were being facetious in your reference to using the funds to pay for hookers. However, if you are actually doing that, you are violating your fiduciary duties. I'm just sayin'

 

[scriptwiz05]

While you can resign, you can't "just" resign. When you took over as trustee, you accepted some duties of trust. You could always go to court to get another appointed.

there is no one else to appoint. we are the only family we have. no banks will take it as the amount is too little and the trustee fees would eat away.

 

[scriptwiz05]

I suspect you were being facetious in your reference to using the funds to pay for hookers. However, if you are actually doing that, you are violating your fiduciary duties. I'm just sayin'

no I was being serious, although I think you read wrong, it was they who spent 5k each on hookers over the past few months. I put my 100k into a new house. but this is why I believe a judge will deny my being able to terminate the trust as these brothers of mine are pretty irresponsible.

 

[Zigner]

no I was being serious, although I think you read wrong, it was they who spent 5k each on hookers over the past few months. I put my 100k into a new house. but this is why I believe a judge will deny my being able to terminate the trust as these brothers of mine are pretty irresponsible.

You can seek to have a different trustee appointed. Some banks will provide this service for a fee paid by the trust.