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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 34320
Experience:  16 yrs estate law, real estate. Wills/Trusts/Probate
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State: North Carolina Subject: Irrevocable Trust, custody

Resolved Question:

State: North Carolina
Subject: Irrevocable Trust, custody account, partial distribution

My sister and I are beneficiaries of my deceased mother's trust, and I am trying to deal with the bank that is the trustee.

This is the communication I received from the bank:
"The partial distribution from your mother's trust will take a bit longer. We first have to close out the custody account and open up an irrevocable trust. We then will need to update the cost and acquisition dates of all of the assets as of date of death. I would not want to make any partial distributions from this trust until the estate attorney gives her OK."

First, what is a "partial distribution" and why wouldn't it be a full distribution?

How would the bank determine the amount of the partial distribution?

What is a custody account?

Why would they have to open a second irrevocable trust?

How long should it take to do this?

Why does she need an OK from the estate attorney?

There is no probate, and I have my mother's trust agreement on hand if you have questions.

Thanks,
Jane
Submitted: 4 years ago.
Category: Estate Law
Expert:  Barrister replied 4 years ago.
Hello,

Is this a revocable living trust currently?
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Are all mother's assets in the trust or are there additional assets in her name outside the trust? (i.e. bank accounts, stocks, vehicles, etc.)
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Does the trust state that all assets are to be distributed upon mother's death?
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Were you minors when the trust was set up?
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Are there stocks or mutual funds in the trust?
.

.

.

Thanks.

Barrister

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Please keep in mind that I am trying to help you understand and resolve your situation. I don't make the laws, I am just reporting or interpreting them, so the outcome may not be what you had hoped for.

.
Please be patient as I am typically working with several customers at any given time. Some answers take 5 minutes, some 35 minutes, depending on the level of complexity. But rest assured, I will get back with you as soon as I am able.

.

If you need additional clarification on this question, just click "Reply" and I will be happy to help you. Please give me as much detail as you can so that I can respond after receiving all the relevant details.

.

Please be aware that I am not entering into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. With that in mind, please do not post any specific information you do not want available for public viewing. The information provided is not a substitute for a local attorney’s legal advice.

Customer: replied 4 years ago.
Hi Barrister,
It is a revocable living trust.

There are minimal assets outside the trust. $700 in a checking account. There are some things of value in a safe deposit, maybe $8000 worth.

The trust says that the assets are distributable to my sister and me, but does not "upon her death."

33% is in stocks, 66% in equities, and I don't see any municipal bonds in her portfolio.

Jane

Expert:  Barrister replied 4 years ago.
Ok, the trustee wouldn't want to make any distributions until any final taxes that may be due for mother or the trust were filed and paid so as to avoid any possibility that there may not be enough funds to pay the debts of the estate.
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A revocable trust, is still considered an asset of the deceased for estate tax filing purposes. The assets pass outside probate, but are still subject to any possible estate taxes due from the decedent.
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If there are any assets outside the trust, a probate case would have to be opened so that those assets could either be distributed by the estate or by the trust if mother had a "pour over will" that designated that all assets outside the trust go into the trust upon her death.
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A custodial account is one that is set up typically when a minor or someone under 21 is involved as a beneficiary initially so that stock and mutual funds can be legally purchased and sold. The investments managed within a custodial account are limited to mutual funds and other similar products offered by regulated investment companies. Once the Grantor passes, the accounts would be converted to accounts in the irrevocable trust's name for later distribution.
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As for why a second irrevocable trust would be set up, I am stumped on that one because a revocable trust automatically becomes irrevocable upon the Grantor's (maker's) death. Unless there was some type of clause in her will or the existing trust, I don't see any need for another trust.
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The estate attorney's ok would be needed because a probate case has to be opened to deal with any assets outside the trust and any final income taxes for the estate and decedent as well as any potential estate taxes. The estate attorney, if they were the executor of any will, would have to pay any last expenses or debts out of the estate funds and potentially the trust funds if there were not enough liquid assets in the estate to pay everything off.
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Based on how probate cases go, most are settled in 9-12 months. But the trustee of the trust would likely be able to at least make a partial distribution of assets once all debts have been paid and the creditor claim period has passed, which is 90 days after the publication of notice to all creditors.
.

.

.

Thanks.

Barrister

.

Please keep in mind that I am trying to help you understand and resolve your situation. I don't make the laws, I am just reporting or interpreting them, so the outcome may not be what you had hoped for.

.
Please be patient as I am typically working with several customers at any given time. Some answers take 5 minutes, some 35 minutes, depending on the level of complexity. But rest assured, I will get back with you as soon as I am able.

.

If you need additional clarification on this question, just click "Reply" and I will be happy to help you. Please give me as much detail as you can so that I can respond after receiving all the relevant details.

.

Please be aware that I am not entering into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. With that in mind, please do not post any specific information you do not want available for public viewing. The information provided is not a substitute for a local attorney’s legal advice.

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