Hello and thanks for your question.
I think you'll find that (a) if the trust is revocable and the
grantor is living, then the grantor has full control and can probably
do whatever (s)he wants, but (b) if the trust is irrevocable (or if it
used to be revocable but the grantor is now deceased which makes it
irrevocable), then although the provisions of the trust governing the
removal and appointment of trustees will probably be determinative,
the trust beneficiaries (and maybe the successor trustee named in the
trust) at least are entitled to notice of what's going on.
Use of Revocable and Irrevocable Trusts
http://www.taxprophet.com/pubs/trust_nl.html
If it's an irrevocable trust then under Michigan law, for example,
there's a notice requirement that must be followed, but if you're not
a beneficiary of the trust you may not be one of the people who's
entitled to notice:
"MCL 700.7303(3) provides that the trustee of an irrevocable
trust would have to provide notification ... to all interested trust
beneficiaries within 28 days after acceptance of trust. This
provision would seem to apply to a successor trustee as well as an
initially appointed trustee. The Technical corrections act for the
Estates and Protected Individuals Code (EPIC) changed the parties
entitled to notice under this section from "trust beneficiaries" to
"interested trust beneficiaries."
When a successor trustee is appointed, who must be notified?
http://courts.co.calhoun.mi.us/epic0095.htm
If you are the named successor trustee in the trust, and if you
believe that the terms of the trust are not being followed, you
probably have standing to go to court and make your concerns known.
Ideally it should be a beneficiary of the trust who does that, though,
because the beneficiary has more of a stake in the outcome, and the
beneficiary should be able to compel the person who has a copy of the
trust to provide it to him or her. Here's the rule in California, but
I'd say the answer would be the same in any state:
"A trustee of an irrevocable trust in California acts as a
'fiduciary' and has the responsibility to carry out the duties of a
trustee as set forth in the law. If the trustee fails to carry out
these duties properly, the trustee is liable for any loss involved,
may be liable for punitive damages, and may have to pay all legal fees
and costs for the person bringing the legal action as well as the
legal fees in defending the trustee. A trustee, if challenged, must
prove what he or she did, that it was proper and that it was done for
the good of the trust and the trust beneficiary or beneficiaries."
TRUSTEE'S DUTY OF ADMINISTRATION OF A CALIFORNIA IRREVOCABLE
TRUST
http://www.mbscott.com/irrev.htm
Here's how the Uniform Trust Code explains the procedure (the Uniform
Trust Code is not the law of any particular state, but it can be
influential when a court is asked to interpret a question of trust
law); you'll notice that paragraph (c) requires you to start by
reading the trust itself so your first task it to encourage a
beneficiary to get a copy of it:
SECTION 704. VACANCY IN TRUSTEESHIP; APPOINTMENT OF SUCCESSOR.
(a) A vacancy in a trusteeship occurs if:
(1) a person designated as trustee rejects the trusteeship;
(2) a person designated as trustee cannot be identified or does not
exist;
(3) a trustee resigns;
(4) a trustee is disqualified or removed;
(5) a trustee dies; or
(6) a [guardian] or [conservator] is appointed for an individual
serving as trustee.
(b) If one or more cotrustees remain in office, a vacancy in a
trusteeship need not be filled. A vacancy in a trusteeship must be
filled if the trust has no remaining trustee.
(c) A vacancy in a trusteeship of a noncharitable trust that is
required to be filled must be filled in the following order of
priority:
(1) by a person designated in the terms of the trust to act as
successor trustee;
(2) by a person appointed by unanimous agreement of the qualified
beneficiaries [but this step probably won't be available in many
states (richard-ga)]; or
(3) by a person appointed by the court.
....
(e) Whether or not a vacancy in a trusteeship exists or is required to
be filled, the court may appoint an additional trustee or special
fiduciary whenever the court considers the appointment necessary for
the administration of the trust.
UNIFORM TRUST CODE (2000)
http://www.law.upenn.edu/bll/ulc/uta/utcamd01.htm
Search Terms:
"irrevocable trust" "successor trustee" notice
If you know what state's law the trust is governed by, post it as a
request for clarification and I'll see if I can find the appropriate
statute.
Of course, this is not legal advice that you can rely on, and you
should talk to an attorney before taking any action.
Good luck! |
Request for Answer Clarification by
triplenickel-ga
on
19 Jun 2002 09:11 PDT
This is what is happening:
First of all this Trust is governed by the laws of the State of
Delaware.
In 1983 my sister and my father died unexpectedly. He had just
homesteaded to Florida a few moths before he died. His one page will
left everything to his wife – our stepmother of over 40 years.
In 1985 our stepmother (Grantor) created an irrevocable Trust naming
her only grandchild (my daughter, then age 1) the Beneficiary.
In 1989, after the Trust was funded, our stepmother named my sister
and me as the successor co-trustees. The Trust directed that my
sister and I were to have life time rights to use the three homes in
the Trust and to receive the net income generated by the Trust during
our lifetimes as trustees. The Grantor also created a second Trust,
which purchased a single premium $1,000,000.00 life insurance policy.
In 1993 my sister died.
Recently, 4/5/2002, my stepmother passed away. Her will leaves the
remainder of her Estate to a Revocable Trust that I was unaware of. A
long lost Great Grand niece I had met only twice before in my life has
been named Executor. To make a long story short, the Great Grand
niece will not return any of my phone calls, letters or emails. I
have misplaced my copy of the 1989 amendment my sister and I signed
accepting, as successor co-trustees, the aforementioned Trust. If the
great grand niece has made that document vanish, how can I prove that
I was once the successor trustee for this Trust?
|
Clarification of Answer by
richard-ga
on
19 Jun 2002 10:41 PDT
I'll do the best I can to interpret the facts as I understand them:
"In 1985 our stepmother (Grantor) created an irrevocable Trust ....
[and in] 1989, after the Trust was funded, our stepmother named my
sister
and me as the successor co-trustees."
So presumably the trust, although irrevocable, reserved to your
stepmother the right during her lifetime to designate successor
trustees.
"The Grantor also created a second Trust, which purchased a single
premium $1,000,000.00 life insurance policy."
This would almost certainly be an irrevocable trust too.
"[M]y stepmother['s] will leaves the remainder of her Estate to a
Revocable Trust...."
So we have three trusts, all of them now irrevocable. Chances are
you're neither a beneficiary nor a trustee of the trust to which the
residue of your stepmother's estate is payable, so you can forget
about that one.
But the first two trusts continue to own whatever assets your
stepmother transferred into them during her lifetime. Your mission,
then, is to make sure that the executor of your stepmother's estate
and the trustee of the third trust are not claiming title to assets of
the first two trusts.
[The answer could be different if the first two trusts were revocable,
because if your stepmother had retained the right to amend them, it's
possible that when she signed the third trust she called it an
amendment and restatement of the first two trusts, which would amend
them out of existence. Hence I'm troubled by your statement that at
some point your stepmother signed a "1989 amendment" to the earlier
trust.]
So since you were a beneficiary of the first trust (and maybe the
second trust too) you should be able to obtain a copy of the first two
trusts, if you can figure out whom to ask for them. One starting
point is the probate court for the locality where your stepmother
died--you should contact them right away and find out if the will has
been filed there, and if so you should read it to see if it makes any
reference to the first two trusts. Even if it doesn't, the probate
court may allow you to inquire what trusts your stepmother was trustee
of at her death, which may lead to the production of a copy of the
three trusts.
Clearly you need professional legal advice to proceed, and as I noted
earlier, you can't get that from me.
Regards,
richard-ga
|
Request for Answer Clarification by
triplenickel-ga
on
19 Jun 2002 14:52 PDT
You knowledge is remarkable! However, I believe that you missed where
I had written that "A long lost Great Grand niece I had met only
twice before in my life had recently been named Executor (of my
stepmother's estate). To make a long story short, the Great Grand
niece will NOT return any of my phone calls, letters or emails. I
have misplaced my copy of the 1989 amendment my sister and I signed
accepting, as successor co-trustees, the aforementioned Trust." "If
the great grand niece has made that document vanish, how can I prove
that I was the successor trustee for this Irrevocable Trust?" If I
find my copy of the instrument that named my sister and I the sucessor
co-trustees in 1989 and produce it to the Court I'll be o.k. BUT, if I
can't locate it, can I subpoena it? What kind of evidence will a
Court accept backing up my allegation? (I mistakenly called that
document an amendment in my earlier posting - but it was just a
document that my sister and I signed accepting the Trust as the
sucessor trustees) Where do I send the $20.00 fee? Thanks!
|
Clarification of Answer by
richard-ga
on
20 Jun 2002 18:06 PDT
Hello triplenickel-ga
Again, I'll try to address the various questions that you raise:
"I have misplaced my copy of the 1989 [document] my sister and I
signed
accepting, as successor co-trustees, the aforementioned Trust."
--It wouldn't hurt to write the attorney who represented your aunt
during that period; the missing paper might be in his/her files.
--Whether or not the paper turns up, your first priority is to locate
a copy of the trust. I suggested working through the probate court;
maybe your aunt's lawyer can produce it.
"How can I prove that I was the successor trustee for this Irrevocable
Trust?"
--Remember, you're entitled to the trust document because you're a
trust beneficiary, so the lack of proof that you're a successor
trustee shouldn't stand in your way of obtaining the trust and
discovering first hand what you're entitled to. Your position as
beneficiary is the more important item; securing your position as
trustee is secondary.
"If I can't locate it, can I subpoena it? What kind of evidence will
a
Court accept backing up my allegation?"
-- If you ultimately bring a lawsuit against the estate, you should be
able to subpoena it. As for evidence, if the niece or the old
attorney produce the paper, you'll have it. I don't think your
recollection of a lost paper is going to carry much weight otherwise,
unless the trust document specifies that you're required to be
appointed. Again, your main focus should be on obtaining the trust
instrument.
"Where do I send the $20.00 fee?"
--I believe you paid Google via your credit card when you asked the
question, so you should be all set.
Regards,
richard-ga
|
Request for Answer Clarification by
triplenickel-ga
on
24 Sep 2002 12:08 PDT
Hi Richard, A lttle update on the April 10, 1985 IRREVOCABLE Trust
that my sister and I both signed as successor trustees and also were
the life income beneficiaries. BUT, in 1993 my sister died. THEN,
because of her death our stepmother became extremely grief stricken
and depressed for the remainder of her life. In 1998 my stepmother had
drafted a: "REVISION IN FULL OF THE BETTY R MOOR REVOCABLE TRUST
AGREEMENT DATED APRIL 10, 1985" HOWEVER: the 1998 'Revision in Full'
document is the ONLY trust document that anyone can find. The lawyer
who drafted it is dead. AND - there is no Schedule "A" for the 1998
'Revision'!!
The "Revision in Full" states as follows: >"the settlor desires to
amend her revocable trust as originally dated April 10, 1985, and to
replace the same with this Revision in Full Revocable Trust Agreement
dated February 4, 1998."<
MY QUESTION IS: Have you ever heard of this type of tactic (a settlor
changes their mind about their irrevocable trust and resorts to fraud
in an attempt to revoke it? What's your best guess as far as any
chance the 1998 'Revision' may have of being valid? Am I right, that
for the 1998 "Revision in Full" to be valid, the 1985 Declaration of
Trust must be produced to learn whether the Trust was Irrevocable or
Revocable - and if it was revocable, what powers the settlor reserved
in the original agreement? Thank you very much. PS: It appears that
the aforesaid is the reason it took the "trustees" five months to come
up with the questionable 1998 document.
|
Clarification of Answer by
richard-ga
on
24 Sep 2002 13:21 PDT
Hello again.
No, I haven't heard of the tactic that you describe.
The April 10, 1985 trust was either irrevocable or revocable.
I agree with you that the only way to answer the question is to obtain
a copy of the April 10, 1985 trust. Any attorney who reads the trust
should be able to provide the answer.
If as you say it was irrevocable, then the purported "revision in
full" will be void and whatever assets were conveyed to the 1985 trust
will have to be disposed of in accordance with the terms of the trust.
If it was revocable a court would probably read the 1998 paper,
despite its ambiguity, as extinguishing the 1985 trust and causing all
assets of the trust to revert to your stepmother to be later disposed
of by her new will.
Best regards
-R
|
