Draft Your Trust Instrument Wisely to Prevent Trustee Drama
“Irrevocable” is a scary word. Many seniors establish revocable trusts to keep their property out of probate, even though a revocable trust does not carry the tax benefits that an irrevocable trust carries while the grantor is alive. As the grantor of a trust, you write the trust instrument, and then the trust functions independently of you, like programming an automaton. If you see the automaton acting in ways you didn’t intend, whether it is simply reflecting your mistakes or glitching or going rogue, you can simply rewrite its code by modifying the trust instrument. This cycle can repeat a theoretically limitless number of times. A revocable trust only becomes irrevocable when the grantor dies, because the grantor is no longer around to tinker with the trust’s machinery. If you have seen your revocable trust in action, you have a good chance of getting it in functioning shape before you go the way of all flesh. What if your trust is already irrevocable from the start, or what about trusts that have become irrevocable because the grantor is deceased? There are remedies for resolving trust-related disputes, but the best solution is a remedy-rich trust instrument. For help drafting a conflict-proof trust instrument, whether your trust starts out revocable or irrevocable, contact a Bronx estate planning lawyer.
What Can Go Wrong Between Trustees and Beneficiaries of a Trust After the Grantor Is Gone?
Only the trustee has the right to make transactions with the trust’s assets; even the grantor cannot do this. What happens when the trustee does not do this? The beneficiaries can compel the trustee to abide by the trust instrument, or even remove the trustee from his or her role, by following the instructions in the trust instrument, or even by going to court. These are some common allegations that beneficiaries of a trust make:
- Breach of fiduciary duty, such as by making risky investments or stealing from the trust
- Failure to follow the instructions in the trust instrument
- Lack of fitness to serve as a trustee, such as because of ill health
Build as Many Remedies as You Can Into Your Trust Instrument to Keep Your Irrevocable Trust Out of Court
Tax incentives may or may not be a motivation for establishing a trust, but keeping the court out of your transfer of property certainly is. Beneficiaries and trustees have the right to bring their trust disputes before the courts of New York, but you can usually avoid this by writing dispute resolution provisions into your trust instrument. Be as specific as possible about the trustee’s duties, and outline what the beneficiaries should do if the trustee does not abide by those duties.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can help you draft a trust instrument that will prevent conflict between the trustee and the beneficiaries. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
Source:
law.justia.com/codes/new-york/ept/article-7/