EQUALIZING A TRUST WITH GIFTS AND BENEFICIARY MANIPULATION

[HCW1896HCW]

Ohio

With very little background.... is this possible?

Can a revocable trust be distributed as follows:

The remaining property of a trust after debts, taxes, death expenses, etc. be divided into three equal shares for three named beneficiaries. However, one specific trust asset ( worth 1/2 of the total value of the trust ) is allocated specifically to the share of one named beneficiary. But, If due to the allocation of the specific trust property ( worth 1/2 of the total value of the trust ), it causes the named beneficiary's share of the trust to exceed the value of the other two beneficiaries 1/3 share of the total value of the trust, the named beneficiary that received the share with specifically allocated trust property must pay the other beneficiaries an amount which will result in each beneficiary receiving a 1/3 share of the remaining trust property.

 

[FlyingRon]

Most likely, yes. However, it would behoove you to have an attorney make sure the trust document is property worded to assure the desired results.

 

[HCW1896HCW]

Most likely, yes. However, it would behoove you to have an attorney make sure the trust document is property worded to assure the desired results.

Hypothetically:

The Value of the trust is 6,000,000. The trust is split into equal thirds ( 1/3 or 33.33% ). One asset, worth 3 million, specifically goes to one beneficiary. That beneficiary would then have to pay each of the other beneficiaries, out his/her own resources, $500,000 to make up the difference.

This would hold up?

 

[LdiJ]

Hypothetically:

The Value of the trust is 6,000,000. The trust is split into equal thirds ( 1/3 or 33.33% ). One asset, worth 3 million, specifically goes to one beneficiary. That beneficiary would then have to pay each of the other beneficiaries, out his/her own resources, $500,000 to make up the difference.

This would hold up?

It could possibly hold up depending on WHY the trust was written that way. For example, if the trustor wanted a specific person to get the family home, and there was no way to know what the family home would be worth many years down the road, compared to the other assets, then it would make sense that a trust would be written that way if the trustor still wanted there to be a fair split of the assets.

The beneficiary in question could likely still opt to allow the asset to be sold so that everything could simply be split evenly.

 

[HCW1896HCW]

It could possibly hold up depending on WHY the trust was written that way. For example, if the trustor wanted a specific person to get the family home, and there was no way to know what the family home would be worth many years down the road, compared to the other assets, then it would make sense that a trust would be written that way if the trustor still wanted there to be a fair split of the assets.

The beneficiary in question could likely still opt to allow the asset to be sold so that everything could simply be split evenly.

What if said gifted asset was an interest in a property holding company with multiple partners? The interest could not be sold because of its association with a business that the beneficiary ( and the trustor ) were apart of and needs for operation.

What if the amount owed to each other beneficiary was exorbitant due to appreciation of the gifted asset and a diminished other portion of the estate?

 

[LdiJ]

What if said gifted asset was an interest in a property holding company with multiple partners? The interest could not be sold because of its association with a business that the beneficiary ( and the trustor ) were apart of and needs for operation.

What if the amount owed to each other beneficiary was exorbitant due to appreciation of the gifted asset and a diminished other portion of the estate?

With that information I would say that the parties involved need to review the trust document with an attorney. If its a an asset that cannot be sold for one reason or another, and the rest of the trust is diminished, it almost sounds like a no win situation.

I know what I would personally do in that situation. I would make installment payments to the other beneficiaries until such time as I could have equalized the division of the assets, if I could not pay it off with a lump sum. I would honor the spirit of the trust no matter what a court might decide.

 

[t74]

The creator of the trust should review his/her estate plan with an attorney experienced with trusts involving the situation you describe.

 

[LdiJ]

The creator of the trust should review his/her estate plan with an attorney experienced with trusts involving the situation you describe.

It sounds like the creator might have already passed away. If not, I would suggest that the creator NOT go that route.

 

[t74]

It sounds like the creator might have already passed away. If not, I would suggest that the creator NOT go that route.

I was unable to figure out if the creator was dead or alive; OP was too vague.

Why should the creator not review his entire estate plan with an attorney? Things change over time - including tax laws. An attorney with the documents in hand would be the best to assess the situation and insure that the person's wishes are implemented.

 

[HCW1896HCW]

I was unable to figure out if the creator was dead or alive; OP was too vague.

Why should the creator not review his entire estate plan with an attorney? Things change over time - including tax laws. An attorney with the documents in hand would be the best to assess the situation and insure that the person's wishes are implemented.

The Trustor has passed away and the trust was created over 20 years ago. The clauses in the trust are much outdated ( tax strategy, etc. )

The intent of the original question is, can a trust force a beneficiary to pay, out of his/her resources because a gifted asset is not able to be sold, other beneficiaries because of language surrounding a gift and distribution of assets.

 

[LdiJ]

I was unable to figure out if the creator was dead or alive; OP was too vague.

Why should the creator not review his entire estate plan with an attorney? Things change over time - including tax laws. An attorney with the documents in hand would be the best to assess the situation and insure that the person's wishes are implemented.

I meant not going the route of trying to divide things up that way if they really want things to be equal.

 

[t74]

OP needs good attorney and not a forum!

 

[HCW1896HCW]

OP needs good attorney and not a forum!

Current attorney is the same that drafted the original trust. Should I get a second opinion?

 

[not2cleverRed]

Ohio

With very little background.... is this possible?

Can a revocable trust be distributed as follows:

The remaining property of a trust after debts, taxes, death expenses, etc. be divided into three equal shares for three named beneficiaries. However, one specific trust asset ( worth 1/2 of the total value of the trust ) is allocated specifically to the share of one named beneficiary. But, If due to the allocation of the specific trust property ( worth 1/2 of the total value of the trust ), it causes the named beneficiary's share of the trust to exceed the value of the other two beneficiaries 1/3 share of the total value of the trust, the named beneficiary that received the share with specifically allocated trust property must pay the other beneficiaries an amount which will result in each beneficiary receiving a 1/3 share of the remaining trust property.

This can only be done before the Trustor dies.

Sorry. That's what happens when people don't update their things.

It happens. And even when one starts with good intentions to divvy things up equitably, if one does not regularly review their estate plan, things can go awry.

Sometimes life isn't fair.

Current attorney is the same that drafted the original trust. Should I get a second opinion?

The Trustor is dead. It cannot be changed.

But go get a second opinion, because maybe someone who has passed the bar can explain it better.

 

[Shadowbunny]

The intent of the original question is, can a trust force a beneficiary to pay, out of his/her resources because a gifted asset is not able to be sold, other beneficiaries because of language surrounding a gift and distribution of assets.

Of course the trust can't force you to pay. However, that doesn't mean there won't be consequences to your actions.

Truly, if you can't work something out with the other beneficiaries, then you are going to have to consult with an attorney.