Dear Liza: My father died several years ago, after my mother passes the children inherit equally per both their wills and the Family Trust. Can my mother change the terms of the trust now? The documents state that the estate will be equally shared by the surviving children when our mother passes. She has decided this means that she can give everything in the homes to one sibling and that when she passes the homes will be sold and divided between all of the surviving children. It seems to me this is not what Dad wanted. Hmm. So, here’s a not very satisfying answer: MAYBE. It all depends on what your parents set up before your father died. Some family trusts do indeed leave everything in a revocable trust for the benefit of the surviving spouse. If that’s what your parents did, then, yes, your mother is free to change the terms of that trust and she is free to give things away during her lifetime as well because the trust assets are all hers. If, however, your parents set up what’s called an “A/B” trust, your mother’s assets would be in a revocable trust that she would be free to change, but your father’s assets (up to the limit of whatever the estate tax exemption was in the year that he died) would be held in an irrevocable trust, which your mother would not be able to change during her lifetime. In California, where I practice, state law requires that you and your siblings would have to be notified after your father died if such an irrevocable trust was established upon his death. Notice requirements differ from state to state, however. Best to find out what your state requires. Your father’s Will probably leaves his tangible personal property (such as clothes, books, etc) to your mother, and then pours whatever else he owned at death into the family trust. So that’s the document that matters in determining what your mother can, and can’t, do now.
Tag Archives: Wills
Dear Liza: Do you have any recommendations on naming children as secondary beneficiaries for life insurance/investments? Why, as a matter of fact, I do! If your children are minors (under 18 in most states), your estate plan should establish some way of managing money for them until they are old enough to handle money responsibly. This is usually accomplished by creating a trust for them until a certain age, say twenty-seven. Until then, you would name a trustee to manage and distribute the child’s assets for them; after that, the money’s theirs to manage and invest. If you have created a living trust, you would name that trust as the beneficiary for your life insurance and the secondary beneficiary for your retirement accounts — that way, the money will be available to your children, but be managed by your trustee.
You can instead use a Will as your main estate planning document and your Will can set up exactly the same structure of a trust for children managed by a trustee until the children reach a certain age. However, if you use a Will, your estate will go through probate BEFORE the trust for the kids can be funded (don’t worry, the kids will have access to your estate during the probate process). Think of this as two roads to the same place — one road (the living trust) just gets you there faster.
If, however, you name minor children directly as beneficiaries on those forms, and you die while they are still minors, a guardian of the estate will have to appointed to manage these assets, and, when a child reaches the age of 18, they money will be all theirs.
If your children are adults, you can and should name them directly. It makes it easier for them to deal with these assets after your death and there are special advantages to doing this with respect to retirement accounts.
I am about to create my Will and Living Trust. My son has two sons and his wife is pregnant with twin girls. I would like to know if I can name the twins in my Will/Trust now although they are not due to be born until December? I’ve written Wills that name children soon-to-be born. You could say that you want to benefit all of your son’s children, including the twins girls due in December. Or you could just say all of the children of your son that are alive at your death (which, unless you die before December would certainly include the new twins). Good luck!