By Tim Barkley. June 2019.
The lawyer greeted Susan as she entered the office. She waved a large maroon notebook. “I think we might have found the trust. Is that what this is? It’s about a million pages long. We were going through some boxes in the basement and found this last night.”
The lawyer carried the notebook to the conference room and leafed through it while Susan seated herself. “Yep, this is a trust form used by lots of lawyers in the 90s. I’ve reviewed it for lots of clients. Here’s where it lists who set up the trust.” He pointed to page one, then flipped the page. “Here’s where it lists the family – your folks, Mary, you and your two brothers, Ricky and Bob. Who’s ‘Michael’?”
“He’s the oldest. He disappeared about 10 years ago, and we all think he’s probably dead. His wife had him declared legally dead a couple of years ago, so she could get his Social Security.”
“Now that’s unique.” The attorney flipped several pages. “Anyway, here’s where it says that the trust takes care of your parents during their lives, and” turning more pages, “here’s where it says that the trust goes to all five kids equally when the second parent – your mother – dies. Later on, I’m sure it says that Michael’s share goes to his kids, if he had any.”
“OK.” Several pages later, “Here’s where it says who the trustees are. Your dad and mom jointly, then the survivor – your mom – then you!”
“I was afraid of that. What does that mean, if Mom’s not really ‘with it’?”
“Well, the trust defines ‘disabled’ back here, and I don’t think your mother fits that definition. She hasn’t been certified to be incompetent. But she’s in no shape to run the trust. Do you think she would let you do it?”
“Probably. Now that Mary’s gone, she’s much more reasonable. What would I have to do?”
“Well, your parents set up the trust. They are are the ‘grantors’ or ‘settlors.’ They were also the ‘trustees,’ the managers of the trust. Now that your dad has passed and your mom is . . . um, ‘challenged,’ you would be the trustee.
“You would manage the trust and pay out money for your mom’s care and expenses. When she dies, you’ll take care of your mother’s final expenses and then pay what’s left to your brothers and sister. And your brother Michael’s kids.
“Assuming your mother agrees to let you be the trustee …”
Susan interrupted: “What if she doesn’t?”
“Then we try to get her doctor to tell us whether she’s competent. If she is, then she’d be the trustee. If the doctor won’t give us a certificate of competency, or if she won’t let the doctor examine her, then we can always go to Court, but that’s a messy solution. Try to get your brothers to talk to her.
“If she agrees to let you be the trustee, remember that your brothers and especially Mary will want proof that you handled the trust correctly. So you need to start with a list of what’s in the trust and what it’s all worth.”
“But I don’t know everything.”
“Sure. Start with what you know, and as things come up, just add them to the list. This will be your ‘initial inventory’ of the trust with you as trustee.
“When your mother dies, you’ll need to show what you started with – the ‘initial inventory’ – plus what you got in, like interest, rent, dividends and Social Security, less what you paid out for your mother’s expenses, and what everyone gets. That’s called the ‘account.’
“Technically you’re supposed to account every year. I’d be willing to bet that Mary will demand an annual account and sue you if you don’t give her one, so start keeping careful records. You don’t want to have to try to justify to everything to a judge without records to back you up.”
“This sounds like a lot of work,” she countered. “Do I have to do it for free?”
“That’s up to you,” the lawyer replied. “A trustee is entitled to a commission based on the size of the trust and its income. But you don’t have to take it. Some people in your situation will decline the commission as long as Mom’s alive, to make sure there’s enough money for her needs, and then claim a cumulative commission when she dies. But we can make that decision later.
“For now, talk to your brothers and your mother. Let’s see what they say.”
“Talk to your mother, and get back to me. I can help you with whatever you need.”
Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
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