Successor Trustees and Beneficiaries

Dear Len & Rosie,

My family has a living trust with two properties that amount to around $1.5 million and also a few hundred thousand dollars in cash in various bank accounts. My Grandmother and Grandfather were the owners of the properties and money until they passed away a couple years ago at the ages of 94 and 96. My father is 75 and is the last living child (both his brothers have passed), and according to my grandparents' trust has since acquired everything, although no paperwork has changed and everything still appears in my grandparents' names.

My father is having a lot of heart trouble and is in the hospital as I write after suffering his 4th seizure this morning, he is ok for now. The living trust has the beneficiaries in order of my father, my oldest brother, my middle brother and then me. Both of my brothers have moved out of the state so my father and I would like to amend the trust to list me as the primary beneficiary. I am the one who will have to deal with everything anyway when my father passes.

Toby

Dear Toby,

It seems fairly clear from the context of your letter that your father never got around to seeing an attorney about his parents' trust after they passed away. And you may also be a bit confused about the way trusts work.

We cannot be sure without actually reviewing your grandparents' trust, but if the trust left everything to your father upon their deaths, then the properties and cash should be distributed outright to your father, unless his inheritance is supposed to be held in trust for your father's lifetime benefit. If your father were to pass away, his interest in his parents' trust will likely belong to his probate estate and shall then pass under the terms of your father's will, if he has one.

What you and your father ought to do is to review his parents' trust with an attorney to verify what ought to be done. He should also look into his own estate plan and should probably create his own revocable trust.

You also need to understand that there is a distinction to be made between who inherits a trust when someone dies (the beneficiaries) and who shall have the responsibility of administering the trust, paying the bills and taxes, and distributing what's left to the beneficiaries (the successor trustees). It certainly makes sense for your father's estate plan to name you as his successor trustee, if you're the only child who lives nearby. But your father shouldn't name you as his sole beneficiary unless he wants to disinherit his two other sons. There's nothing preventing your brothers from inheriting California properties if they live out of state, or even out of the country, unless that's what your father wants. He needs to see a lawyer soon.

Len & Rosie