Palm Beach probate litigators know that trusts can be an effective estate-planning tool especially for married couples. Often these trusts will alter upon the death of one of the settlors changing from a revocable to an irrevocable trust. Do you understand the differences? You may want to see what an Arkansas Court of Appeals had to say about the issue.
Revocable Trusts
- A revocable trust is a trust whereby provisions can be altered or canceled dependent on the grantor.
- During the life of the trust income earned is distributed to the grantor and only after the death does the property begin to transfer to beneficiaries besides the grantor.
- Although these are the basic terms of a revocable trust Palm Beach probate litigators know how customize these trust documents to suit individuals.
- Revocable trusts have a lot of rules to avoid abuse by the grantor especially as far as taxes go.
- Do you know where to find the statutory authority on what you can and cannot due under a valid revocable trust?
Irrevocable Trust
- An irrevocable trust is a trust that can’t be modified or terminated without the permission of the beneficiary and pursuant usually to the judgment of the trustee.
- The Boynton Beach grantor having transferred assets into the trust effectively removes all of his or her rights of ownership to the assets and the trust.
- Often Palm Beach residents will set up something called a pour over will whereby arevocable trust is set up and after that party’s death the trust will transform into anirrevocable trust for the beneficiaries.
- So what happens when a Delray Beach couple creates a pour over will and after one of them dies the other wants to change the terms?
- Is the transformation complete to Jupiter Beach irrevocable or can the wife alter the trust still?
Cason v. Lambert
- The Arkansas Court of Appeals recently heard a case regarding a wife’s authority to alter the terms of a family trust.
- The successor trustee of a family trust brought an action for declaratory judgment, asking the court to rubber stamp approval over distributions of trust assets. The beneficiary answered and counterclaimed in a new suit saying that the actions of thesettlor (grantor) and the trustee were impressible. The dispute centered on the wife’s desire to amend the terms of the trust and get some distributions after her husband had passed away.
- State statutes said this was impermissible but the terms of the trust allowed it.
- Ultimately the court held that in between the conflicting two statements that the terms of the trust would hold.
Want to learn more check out the entire case by clicking here.