Irrevocable House Trust vs. Will

[LdiJ]

Just to be clear on a statement made in your response.... Can a change in the Will dictate the outcome of the Irrevocable Trust? I thought and have been told my several sources that they are two separate vehicles and each dictates the outcome. The Irrevocable Trust owns the house and I am the Trustee. The Will most likely gives my sibling 50% upfront now of all liquid assets, cash, cd's ira's etc. Please confirm

An irrevocable trust cannot be changed period. Only the trustee can do anything with the trust and then can only do things that agree with the trust as written. If the house was not yet deeded to the trust then that would be a different story. However, based on what you have said the house IS deeded to the trust.

Your mom can put anything she wants in her will, but if she states something in her will that is contrary to the trust, then the will will be invalid on that particular issue as far as any assets are concerned that are already part of the trust.

 

[Zigner]

As the trustee of the trust, you should have a copy of the trust. Without it, you have no way to be sure you are following the terms of the trust now, much less in the future.

 

[NeonMoon]

As the trustee of the trust, you should have a copy of the trust. Without it, you have no way to be sure you are following the terms of the trust now, much less in the future.

I have the papers/Irrevocable Trust locked up in my safe.

 

[Zigner]

I have the papers/Irrevocable Trust locked up in my safe.

Oh - I thought your reference to that was stating they were locked up in someone else's safe.

 

[zddoodah]

An irrevocable trust cannot be changed period.

I haven't been following this thread, but this caught my eye. As an absolute statement, this is not true. Irrevocable trusts cannot be revoked, but they sometimes (depending on the language of the trust and the applicable state law) be modified.

 

[NeonMoon]

I haven't been following this thread, but this caught my eye. As an absolute statement, this is not true. Irrevocable trusts cannot be revoked, but they sometimes (depending on the language of the trust and the applicable state law) be modified.

The trust was written in New York State and I (the trustee) reside in New Jersey. Where would it be upheld, NY?

 

[Taxing Matters]

The will does not control trust assets.

Correct. But the will may transfer probate assets to the trust. Thus, what is known as a "pour over will" is often used in combination with a trust. All that the pour over will does is transfer all the probate assets to the trust instead of making individual bequests. It's purpose is to ensure that any assets that didn't get transferred to the trust while the trust creator was live get moved there after death so that only one document — the trust — contains the plan for distributing assets that do not have pay on death beneficiary designations (POD). POD designations are common for financial assets like checking and savings accounts, CDs, mutual funds, 401(k) plans, etc.

 

[Zigner]

Correct. But the will may transfer probate assets to the trust. Thus, what is known as a "pour over will" is often used in combination with a trust. All that the pour over will does is transfer all the probate assets to the trust instead of making individual bequests. It's purpose is to ensure that any assets that didn't get transferred to the trust while the trust creator was live get moved there after death so that only one document — the trust — contains the plan for distributing assets that do not have pay on death beneficiary designations (POD). POD designations are common for financial assets like checking and savings accounts, CDs, mutual funds, 401(k) plans, etc.

Yes, but once transferred, they are trust assets that are no longer controlled by the will.
(I know we're saying the same thing - this is just a refinement process )

 

[Taxing Matters]

An irrevocable trust cannot be changed period.

An irrevocable trust cannnot, of course, be revoked by the trust grantor. But the trust terms may permit certain changes to the trust. For example, the trust terms may allow the trust grantor to replace the trustee, allow the trustee to change beneficiaries. Before putting any thing like this in a trust document, a tax professional familiar with the income tax, estate tax, and gift tax rules related to trusts ought to be consulted because putting in certain powers to change things may result in the trust assets being dragged back into the gross estate for estate tax purposes.

 

[NeonMoon]

Correct. But the will may transfer probate assets to the trust. Thus, what is known as a "pour over will" is often used in combination with a trust. All that the pour over will does is transfer all the probate assets to the trust instead of making individual bequests. It's purpose is to ensure that any assets that didn't get transferred to the trust while the trust creator was live get moved there after death so that only one document — the trust — contains the plan for distributing assets that do not have pay on death beneficiary designations (POD). POD designations are common for financial assets like checking and savings accounts, CDs, mutual funds, 401(k) plans, etc.

All other asset's listed on the well of my mom's has both myself and sibling listed as equal distribution beneficiaries and we have to both be present to claim the proceeds, 50/50

 

[NeonMoon]

All other asset's of my mom's has both myself and sibling listed as equal distribution beneficiaries and we have to both be present to claim the proceeds, 50/50

An irrevocable trust cannnot, of course, be revoked by the trust grantor. But the trust terms may permit certain changes to the trust. For example, the trust terms may allow the trust grantor to replace the trustee, allow the trustee to change beneficiaries. Before putting any thing like this in a trust document, a tax professional familiar with the income tax, estate tax, and gift tax rules related to trusts ought to be consulted because putting in certain powers to change things may result in the trust assets being dragged back into the gross estate for estate tax purposes.

 

[NeonMoon]

NeonMoon... where would I find such wording where it states the grantor (my mom) has the right to designate a new trustee (myself). Would that be in the first few pages of the trust?

 

[Zigner]

NeonMoon... where would I find such wording where it states the grantor (my mom) has the right to designate a new trustee (myself). Would that be in the first few pages of the trust?

Each trust may be different. You will need to read the trust.

 

[Taxing Matters]

NeonMoon... where would I find such wording where it states the grantor (my mom) has the right to designate a new trustee (myself). Would that be in the first few pages of the trust?

It may be anywhere in the trust document. Each lawyer drafts documents differently, including trusts. Thus, the order of the various provisions of the trust will differ from trust to trust. However, usually the powers retained by the trust grantor are all together in one part of the trust, and may have a heading to that part labeled something like "Powers of the Trust Creator".

 

[NeonMoon]

I read thru the document and it says..."The Grantor may discharge a Trustee, Co-Trustee, etc. for cause or without cause, absolutely in their sole discretion....... I guess this means that my mom can remove me as Trustee of the Trust. Would it even hold up at this point since it is an Irrevocable Trust?