Unsigned Irrevocable Trust

[cblondie1nm]

What is the name of your state?What is the name of your state?
NM
A very good friend of mine was the beneficiary of a large sum of money upon his estranged wife's death. It was his intention to put the money in a trust for his two daughters with their maternal grandparents as trustees. An agreement was drafted but he never signed it. Subsequently, he directed the insurance company to make the beneficiary check payable to "the trust." He is now having trouble with the grandparents in regards to one of his daughters and he has just found out that the grandparents have been unable to get a bank to take the trust and the check from the insurance company has never been cashed...they will not give a reason for this. I have speculated that it is because the trust is not signed. The grandparents state it does not have to be signed to be valid...is this true? The grandparents live in Michigan and it was their attorney that drafted the trust, but my friend lives in New Mexico as do his two minor daughters.

 

[Dandy Don]

So what reason does the attorney give for this man not having signed his trust?

Does the man have other assets that need to be probated? Did he leave a last will and testament and does anyone know where that is or did he put all assets into the trust?

Grandparents should first consult with a trust attorney (different from the one who helped their son draft his trust) to find out what their next step should be.

Maybe they can present a copy of the trust to the bank to show that they were named trustees. If bank won't accept that because it isn't signed, then they need to ask the insurance company to reissue the check to the estate and then grandparents or their attorney need to open up probate and get letters testamentary so they can claim this money for the estate.

DANDY DON IN OKLAHOMA ([email protected])

 

[seniorjudge]

What is the name of your state?What is the name of your state?
NM
A very good friend of mine was the beneficiary of a large sum of money upon his estranged wife's death. It was his intention to put the money in a trust for his two daughters with their maternal grandparents as trustees. An agreement was drafted but he never signed it. Subsequently, he directed the insurance company to make the beneficiary check payable to "the trust." He is now having trouble with the grandparents in regards to one of his daughters and he has just found out that the grandparents have been unable to get a bank to take the trust and the check from the insurance company has never been cashed...they will not give a reason for this. I have speculated that it is because the trust is not signed. The grandparents state it does not have to be signed to be valid...is this true? The grandparents live in Michigan and it was their attorney that drafted the trust, but my friend lives in New Mexico as do his two minor daughters.

I don't think your friend is being truthful with you.


Subsequently, he directed the insurance company to make the beneficiary check payable to "the trust."

So you are saying that the insurance company never bothered to check whether such a trust existed? That right there is pretty strange.



Q: The grandparents state it does not have to be signed to be valid...is this true?

A: Of course not. An unsigned trust is merely an unsigned trust. Take it camping and use it for toilet paper.

 

[somessedup]

Unsigned Trust, here too! Then, a Will that conflicts with the unsigned Trust.

I know that the insurance company should have checked, the agent should have checked, etc. But, somehow my relative purchased an ILIT policy without a signed trust. We were asked by the insurance company for the trust FEIN and thought, what??? So, we dug up all this stuff from various professional offices. The trust appears to have never been signed, but there is an FEIN. The unsigned trust distributes the insurance proceeds by percentages to the beneficiaries (3 of them).

Then, there is a SIGNED will. The will mentions the insurance in a way that was expected by me. The will directed me (the sole beneficiary & owner of the policy) to use the proceeds in a different way. This was a discussion I had with the deceased on numerous occasions, and so the mention in the will was no surprise.

So, is the trust valid? How to deal with this? This estate will be probated in ALABAMA

 

[adjusterjack]

So, is the trust valid?

Maybe.

"Section 46A-4-407 of the New Mexico Uniform Trust Code: Evidence of oral trust. Except as required by a statute other than the Uniform Trust Code [46A-1-101 NMSA 1978], a trust need not be evidenced by a trust instrument, but the creation of an oral trust and its terms may be established only by clear and convincing evidence."

http://law.justia.com/codes/new-mexico/2011/chapter46A/article4/section46A-4-407/

It might be that the unsigned trust is clear and convincing evidence of an oral trust.

The Alabama Uniform Trust Code says the same thing in Section 19-3B-407:

http://law.justia.com/codes/alabama/2013/title-19/chapter-3b/section-19-3b-407/

Ditto Michigan in Section 700.7407:

http://law.justia.com/codes/michigan/2014/chapter-700/statute-act-386-of-1998/division-386-1998-vii/division-386-1998-vii-4/section-700.7407/

There is that one caveat in each statute about "Except as required by a statute other than the Uniform Trust Code" so I don't know what kind of issue that might create.

How to deal with this?

Hire a trust attorney.

This is not a DIY project.

 

[Dandy Don]

The decedent probably did not realize that if the trust had been signed, it would have taken priority (by Alabama state law) over the will. But since it was not signed, the will is going to be the determining factor in how this estate will be distributed.

somessedup: You should have started your own thread so that your question could have been answered separately from the other posting on this board. But we forgive you for doing that--it happens all of the time if people are not familiar with how to post a new query.