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Friday, December 23, 2016

I'm 27 years old and the executors say they can keep my inheritance in trust if they see fit

I hear a lot of questions from beneficiaries whose shares are being held in trust. I'm surprised at how often the beneficiaries have not been told anything at all about the terms of the trust. It's impossible to know your legal position without information. A recent note from a reader talked about this situation. Here are the note and my comments:

"I inherited money from my deceased mother but it was to be given to me in trust. I am now 27 years old and the executors are claiming they can still hold it until they see it fit to give it to me."

Since you didn't actually ask a question, I'm not sure whether you are looking for a possible explanation for the situation or whether you want to know if you can change the situation. So, let's talk about both of those possibilities.

The first thing you need to know is that trusts are not always about the age of the beneficiary. Sure, some trusts are set up because the beneficiary is a minor, but not all of them. One possible reason is that your mother thought that you can't handle money well, or that the trustee would be a help to you in managing the money. Another possibility is that she was protecting you from a possible bad marriage or from creditors. Yet another is that she was hoping you'd change your life in some way, such as getting treatment for an addiction. Since I don't know you, I couldn't even hazard a guess.

The next thing you need to know is that even if you never know the reason for the trust, your mother was entitled to leave her money to you in any way she saw fit. It's not up to you nor is it up to the executors.

Having said all that, I do have some ideas for you about how to better understand your legal position and any possible actions you might be able to take.

First and foremost, get a copy of the will that left the money in trust. This is absolutely essential. This is where the executors are getting their instructions. If you don't have a copy of the will, you don't know whether they are carrying them out properly. Maybe they have the right to keep holding your inheritance in trust and maybe they don't, but you can't know if you don't see the will that created your trust.

Get the will from the executors. They have no reasonable excuse not to give you one, since you are a beneficiary. If they refuse - and believe me, some executors refuse even the simplest requests for no sensible reason at all - you have a choice. You can get a copy elsewhere, such as from the probate court or another family member. Or you could ask a judge to force the executor to give you a copy. I sincerely hope it would not come down to the latter but if it does, the court will, in my opinion, side with you and probably award costs against the executors as well.

I suggest that you take the will to a lawyer with experience in wills and estates. Go over the provisions of the will that set up your trust and be frank with the lawyer about your circumstances. There has to be an end to every trust, whether the trust ends when you reach a certain age, or lasts for your whole lifetime, or is triggered by something else. You must be able to tell from the will when the trust is supposed to end, which in turn means when you will receive your money outright.

Pay particular attention to the clauses in the will that define how much discretion the executors have  to pay or not pay funds to you. Since the executors have told you they can hold it "until they see fit", it sounds as if they are relying on a discretion given to them in the will. Are they acting properly within that discretion, or are they exceeding it? The lawyer should be able to help you determine what is appropriate and what is not.

Depending on what you find, you can ask the court to change the terms of the trust so that you can be paid out now. Keep in mind that you can't expect an executor to simply ignore the terms of the trust just because they are inconvenient for you, so there is only so much an executor can do to accommodate your wishes. To collapse a trust early or to materially change the terms can only be done by a judge. It's an uphill battle, because as a general rule, the courts don't want to interfere with clearly-stated wishes when they appear in a will. As I said, your mother had the right to set up a trust if she saw fit, and the courts will try to uphold her wishes if possible.

2 comments:

  1. I have a question
    My brother is the executor of our mothers estate..will states sell the home and split it between the 4 parties. One of the 4 parties made an offer on the home. 3 of the people agreed on the price but the executor ( he's one of the 4) refused the offer..can he do that? Does he have all the rights to decide what the house sells for? Even though 3 out of the 4 agreed

    Thank you

    ReplyDelete
    Replies
    1. Hi Bernie,
      Yes, the executor can do that because he has the final say as to the sale of any estate assets. But like anything else involving judgment calls, the executor should be reasonable.

      Does he feel that the offer is too low? As an executor he is legally bound to maximize the estate and get the best price he can for each asset. You'd have a hard time convincing a judge or anyone else that he's not doing his job if the offer is below fair market value.

      On the other hand, if it is a fair and reasonable offer, there should be no reason for him to turn it down. If the will says an asset is to be sold, it can be sold to a beneficiary unless the will specifically says otherwise, so that shouldn't be the problem.

      This is the type of situation which needs to be talked out rather than litigated, in my opinion. Get to the bottom of his objections so that they can be overcome.

      Lynne

      Delete

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