What is the name of your state (only U.S. law)? Florida
Myself and two siblings are beneficiaries of an irrevocable trust set up by our grandfather. The trust language dictates that upon grandpa's death, my father was to receive a certain percentage of the corpus every year. Upon our father's death, we (grandchildren) are to receive income and discretionary principal distributions. Our father has died so myself and siblings are now primary beneficiaries and are receiving said income. It's essentially a dynasty trust -- there is no set date for termination or anything like that.
The total trust is worth a couple mil. (well below the GST tax exemption limit) split equally between the three of us, so there should be no taxes due, other than some income, potentially.
All beneficiaries would like to terminate the trust and have access to the principal for various reasons, but the motivating factor is that the income being generated is very little and the principal is not growing. We believe that termination would be more beneficial.
The current trustee is a large corporation relying on a committee to make decisions on principal distributions. Further, they are unwilling to get on board with our request to terminate. Therefore, we have contacted a couple of attorneys and discussed options -- all of the attorneys have found that the trust language leaves some room for interpretation on what to do with the estate upon the death of our father, believing it could be argued that we were to be paid outright upon his death. However, I do not think that was our grandfather's intent -- it was just poor drafting.
The discrepancy in interpretation is as follows:
"Upon the death of [father], the Trustee shall distribute the remainder of the Trust Estate to [father's] then living lineal descendants, per stirpes." -- The attorneys we've talked to say that this means we should be paid out, yet there's a later article which instructs the trustee how to handle trusts for grandchildren (us).
"Each share established for the benefit of a grandchild of Grantor in accordance with the preceding Articles of this Trust Agreement shall be held by the Trustee as the principal of a separate Trust." -- This shows my grandfather's intent, even though the previous article was not explicit about referencing this article for grandchildren should my dad leave living descendants. This article for grandchildren is only referenced in the previous article in the event our father had NOT left any lineal descendants.
I know that my grandfather fully intended for all shares going to grandchildren to be kept in trust. I have contacted the attorney who drafted the document and he's confirmed as much. However, the language is muddy and this is why various attorneys have suggested that we should have received our shares free of trust and that the "grandchildren" article does not apply to us. It should only apply if my dad had no living children or other descendants.
So we've decided, before hiring an attorney and taking this to court, that we would attempt to find a new trustee who would be willing to terminate it for us, based on that interpretation. The document gives us the ability, as beneficiaries, to remove the current trustee and appoint a successor. The trick is finding somebody who meets the requirements and is willing to do such a thing -- we'd even be willing to pay. So far, no such luck, but we've only tried two trust companies at this point. As I understand it, Florida law allows non-judicial modification, as long as it's permissible.
We're just not sure what to do at this point -- Continue shopping for a trustee who will act in our interests, if that's even possible, or just lawyer up and take this thing to court knowing that the current trustee will fight it and that the drafting attorney could potentially provide extrinsic evidence in favor of the trustee.
Myself and two siblings are beneficiaries of an irrevocable trust set up by our grandfather. The trust language dictates that upon grandpa's death, my father was to receive a certain percentage of the corpus every year. Upon our father's death, we (grandchildren) are to receive income and discretionary principal distributions. Our father has died so myself and siblings are now primary beneficiaries and are receiving said income. It's essentially a dynasty trust -- there is no set date for termination or anything like that.
The total trust is worth a couple mil. (well below the GST tax exemption limit) split equally between the three of us, so there should be no taxes due, other than some income, potentially.
All beneficiaries would like to terminate the trust and have access to the principal for various reasons, but the motivating factor is that the income being generated is very little and the principal is not growing. We believe that termination would be more beneficial.
The current trustee is a large corporation relying on a committee to make decisions on principal distributions. Further, they are unwilling to get on board with our request to terminate. Therefore, we have contacted a couple of attorneys and discussed options -- all of the attorneys have found that the trust language leaves some room for interpretation on what to do with the estate upon the death of our father, believing it could be argued that we were to be paid outright upon his death. However, I do not think that was our grandfather's intent -- it was just poor drafting.
The discrepancy in interpretation is as follows:
"Upon the death of [father], the Trustee shall distribute the remainder of the Trust Estate to [father's] then living lineal descendants, per stirpes." -- The attorneys we've talked to say that this means we should be paid out, yet there's a later article which instructs the trustee how to handle trusts for grandchildren (us).
"Each share established for the benefit of a grandchild of Grantor in accordance with the preceding Articles of this Trust Agreement shall be held by the Trustee as the principal of a separate Trust." -- This shows my grandfather's intent, even though the previous article was not explicit about referencing this article for grandchildren should my dad leave living descendants. This article for grandchildren is only referenced in the previous article in the event our father had NOT left any lineal descendants.
I know that my grandfather fully intended for all shares going to grandchildren to be kept in trust. I have contacted the attorney who drafted the document and he's confirmed as much. However, the language is muddy and this is why various attorneys have suggested that we should have received our shares free of trust and that the "grandchildren" article does not apply to us. It should only apply if my dad had no living children or other descendants.
So we've decided, before hiring an attorney and taking this to court, that we would attempt to find a new trustee who would be willing to terminate it for us, based on that interpretation. The document gives us the ability, as beneficiaries, to remove the current trustee and appoint a successor. The trick is finding somebody who meets the requirements and is willing to do such a thing -- we'd even be willing to pay. So far, no such luck, but we've only tried two trust companies at this point. As I understand it, Florida law allows non-judicial modification, as long as it's permissible.
We're just not sure what to do at this point -- Continue shopping for a trustee who will act in our interests, if that's even possible, or just lawyer up and take this thing to court knowing that the current trustee will fight it and that the drafting attorney could potentially provide extrinsic evidence in favor of the trustee.
