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    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #1

    Aug 19, 2013, 09:40 AM
    Can't name my own beneficiary of a trust? Now what?
    My father left me a small trust. I recently was working on my will and decided that I wanted to just name a beneficiary on the trust. So I asked for a form.

    This is what the bank officer told me:
    "There are no beneficiary forms for trusts. The trust document (almost always) directs where the assets are to go upon your death. In the case of the trust for your benefit, this is less clear as the drafting attorney neglected to mention the ultimate disposition of the trust assets in the trust document and subsequent amendments. As a result, most likely distribution would go to the lineal descendants of [my father]. Given the lack of final dispositive language in the trust for your share, the Bank may look to the Court for approval of the ultimate distribution if needed at some point in the future."

    HUH? Will my will be able to name who gets it?
    PS: This is a small town bank and I have had nothing but stuff like this since way before each of my parents died.
    AK lawyer's Avatar
    AK lawyer Posts: 12,592, Reputation: 977
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    #2

    Aug 19, 2013, 09:54 AM
    Putting it another way, the bank is telling you that you cannot amend your father's trust so as to designate beneficiaries to succeed you. Instead, you would have to leave your assets (including what you get from your father's trust) by your own trust or will.

    Consult with an estate planning attorney.
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #3

    Aug 19, 2013, 10:00 AM
    Quote Originally Posted by AK lawyer View Post
    Putting it another way, the bank is telling you that you cannot amend your father's trust so as to designate beneficiaries to succeed you. Instead, you would have to leave your assets (including what you get from your father's trust) by your own trust or will.

    Consult with an estate planning attorney.
    So you are saying that the trust goes into my estate?
    The way he wrote it he makes it sound like it goes directly to my 'father's descendants.'
    My sister has 2 kids and my brother 9. I want the kids to get equal shares, not half to each sibling. We are all old now anyway.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #4

    Aug 19, 2013, 10:04 AM
    The bank is correct - the determination for how the assets of the trust are handed down to heirs is by the terms of the trust document, not your will, nor your father's will. Perhaps you are not aware but your will only controls assets that don't specifically have a beneficiary named. Accounts with named beneficiaries - things like life insurance, IRA, 401(k) account, and any financial accounts with "payable on death" instructions - are distributed to the names beneficiary(ies) of the account when you die, regardless of what your will says.

    In this case it seems your father and his attorney weren't thinking that the trust would outlive you, which is unfortunate because a trust should always define what happens to its assets if the beneficiary dies. Does it define how distributions of principal are to take place? Does it define terms for the trust to be dissolved?
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #5

    Aug 19, 2013, 10:16 AM
    I know about a will not covering assets that already have a named beneficiary - that's why I wanted to name one. I only have a house and the trust and a small amount in checking.

    It defines distributions very generally and we have worked out a fixed amount each month. It doesn't define dissolution. I would LOVE to get it out of there because the minimum bank fee is more than it's earning. It's the smallest trust they have. They probably would love to get rid of it. I think there's a state law that says they can just give it to me if it drops to a certain amount.
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    ebaines Posts: 12,131, Reputation: 1307
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    #6

    Aug 19, 2013, 11:11 AM
    It is often possible to dissolve a trust and distribute the remaining assets as long as the trustee and all beneficiaries agree. If this is a relatively small trust - and especially if it's been running for many years - it may make sense to do this. Is the bank the trustee? Have you asked about dissolving it?
    AK lawyer's Avatar
    AK lawyer Posts: 12,592, Reputation: 977
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    #7

    Aug 19, 2013, 11:35 AM
    Quote Originally Posted by joypulv View Post
    So you are saying that the trust goes into my estate?
    ....
    No. But since your father and his attorney weren't careful enough to specify how it should be distributed, as the bank advised you, a court would have to decide.

    So yes, as others have suggested, the best way to handle this is for everyone to agree that the trust should be wound up and distributed as all of you agree.

    As I previously suggested. Get an attorney. Doing that will save you a lot of money in the long run.
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #8

    Aug 19, 2013, 11:52 AM
    This just happened today - I'm not ready to hire anyone yet.
    The trust is less than 2 years old.
    The bank and my sister are trustees.
    I wrote to my siblings just now and told them how I hope they will distribute their halves. I have every reason to believe they will. We've agreed on everything in the past.
    If for some weird reason they don't - I'll be dead.

    I have a bee in my bonnet about lawyers and banks charging high fees for incompetence.
    And outright deceit - I moved to my dad's and bought into his house after my mother died, and the bank appraisal was an old (height of the market) one with a new date slapped on it. It was high, so after my dad died and we sold the house in Nov '11, I lost a LOT. Trouble was I didn't notice that it was the same appraisal that had been done years earlier until I went through old papers after my dad died.
    AK lawyer's Avatar
    AK lawyer Posts: 12,592, Reputation: 977
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    #9

    Aug 19, 2013, 12:39 PM
    Quote Originally Posted by joypulv View Post
    ...I have a bee in my bonnet about lawyers and banks charging high fees for incompetence.
    And outright deceit - ...
    Trouble was I didn't notice that it was the exact same appraisal that had been done years earlier til I went through old papers after my dad died.
    As the old saying goes, :"If you want to get something done right, you do it yourself." Except that in this case that didn't appear to work either. As I understand what you are saying, you also erred by failing to note that the new appraisal was the same old one with a new cover.

    If you believe the updated appraisal was incorrect, you could perhaps take action against someone. But it appears that it might have been right but someone didn't bother re-doing all of the details. In my experience appraisals are full of pictures and window dressing. The only important part are the comparable sales. Were they current?
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #10

    Aug 19, 2013, 02:06 PM
    My mother had died 12/26/05 and I bought a portion of her half (in trust) July 2007. I was taking care of my dad, plus I had a house to sell, and a roommate, 45 minutes away. I had no reason to think a glossy $1,000 bank/estate appraisal would be 19 months old. Values were plummeting just then. I don't have the old one any more. (Comp sale dates on the new one were left blank.) My mother was an extreme packrat; stuff got lost. I'd have to request a copy from the appraiser or bank.
    When I told the bank officer in 2011, she didn't deny it; just said 'Do what you have to do.'
    Too drained, fried. Wasn't the SOL over, 4+ years?
    As for doing the appraisal myself? I did. Lotta good that did me. Small town, very few comps. The bank appraiser and the town were 36% apart when the town reassessed (and no, I'm not confusing assessment with appraisal). I went to the town appraiser and she said the bank appraiser didn't know what he was doing.
    So I was out about $25,000.

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