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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 33717
Experience:  15 yrs estate law, real estate. Wills/Trusts/Probate
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Estate/Trust ?: My parents created a family trust a few years

Customer Question

Estate/Trust ?: My parents created a family trust a few years ago with 3 sons as the successors with per stirpes provisions. My mother passed away a few years ago just leaving my father. Two of the children have children of their own (grandchildren to parents), including myself (3). One of my brothers recently passed away (no children). My surviving brother has 2 children. I am the successor trustee and then it goes to my surviving brother followed by his oldest daughter (oldest grandchild). The question is how would the trust be modified if my brother or I pass before my father. Currently 1/3 split is now 1/2. If I die first will my children receive 1/2 or be locked into 1/3 with the rest going to the surviving brother? As the trust is ''per stirpes'' I wonder if the trust should be modified for the grandchildren to inherit equally (I have 3 kids and my brother has 2 which means that my children will each inherit 2/3s of the amount of his)?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Barrister replied 1 year ago.
Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.
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Is there anything in the trust that states that the beneficiary has to survive the grantors in order to inherit?
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thanks
Barrister
Customer: replied 1 year ago.
No, I do not recall that language. Just 3 beneficiaries and per stirpes for the grandchildren.
Customer: replied 1 year ago.
If my deceased brother had children then they would receive 1/3 but he had none so it is now my surviving brother and myself to inherit 1/2 each when my father passes....which gives rise to the original question of what happens if my brother or myself predecease our father (obviously if my father passes first then it is 1/2 each).
Expert:  Barrister replied 1 year ago.
Ok, the way this works is that the estate would be divided 3 ways to the primary beneficiaries or their estates, regardless of how many beneficiaries there actually are.
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So if there is one child who is decdeased, then his heirs would divide up his 1/3 amongst them. The living children would also each receive 1/3 of the assets. If one of them later passed prior to the trust disbursing, then their estate would "step into their shoes" and inherit their 1/3 and it would descend to their heirs as well.
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So technically, the brother who passed's estate would still technically inherit 1/3, but since he has no heirs, it would go back to the parents and then descend through their estate.
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But in order to avoid all this confusion, it would simplify things to simply amend the trust to state that the deceased brother is removed as a beneficiary and that the two remaining children will divide the estate equally. If one of them should pass, then their share shall descend to their heirs evenly.
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That eliminates the problem with the deceased brother's share having to go through probate and then back to parents and also the problem with other heirs passing prior to the grantor.
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thanks
Barrister
Customer: replied 1 year ago.
So it would be best to modify the trust to just include the two surviving primary beneficiaries (both of whom have children who are covered on a per stirpes basis). I guess my concern is what would happen if no change was made and either myself or my brother passed before my dad. Would 1/2 go to the surviving brother's children or just 1/3 assuming passing before the grantor (my father)?
Expert:  Barrister replied 1 year ago.
""So it would be best to modify the trust to just include the two surviving primary beneficiaries (both of whom have children who are covered on a per stirpes basis).""
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Correct, otherwise the deceased sibling's share will have to go through probate, back to parents, then down through their estates to you and the other surviving sibling. Unnecessarily complication of things..
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""I guess my concern is what would happen if no change was made and either myself or my brother passed before my dad. Would 1/2 go to the surviving brother's children or just 1/3 assuming passing before the grantor (my father)?""
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The 1/3 is fixed now...Deceased brother's estate gets 1/3, Older brother gets 1/3 and you get 1/3. Even if someone passes, that doesn't change that distribution, their estate would just receive that 1/3.
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But it will create a lot more expense and take a lot more time because those interests will have to go through the deceased beneficiary's estate.
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If the trust is amended to put in provisions that automatically account for this, then those assets won't have to go through the deceased's estate and expensive probate.
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thanks
Barrister
Customer: replied 1 year ago.
As I understand it the deceased (actual not hypothetical) brother's share (1/3) gets absorbed back into the trust as he has no heirs. He had no will either so an estate had to be opened for his assets but not to include his potential share of the trust since he predeceased the grantor. All that should change here is just the mathematics of the division amongst the surviving primary beneficiaries (1/3 to 1/2). I am a little confused as to why the deceased brother's share of the trust would have to go thru probate. It seems logical that he is simply eliminated by death as a beneficiary with no heirs. It appears then that if my brother or myself passes before our father then the surviving children would receive 1/3 of the original family trust and not the 1/2 that it would be if my father (grantor) passed first....and being in trust it should avoid probate. As the first survivor trustee I am trying to get this straight and make a decision about suggesting any amendments.
Expert:  Barrister replied 1 year ago.
""As I understand it the deceased (actual not hypothetical) brother's share (1/3) gets absorbed back into the trust as he has no heirs.""
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If that is the case, then there is actually a "survivorship clause" in the trust because that is the only way a deceased beneficiary's interest would automatically be extinguished. That is why I asked that initially... It either has the survivorship clause or it doesn't..
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If the trust states that if a beneficiary dies before the maker of the trust, their gift lapses, then that means that the deceased brother's gift would have extinguished, leaving just the two of you. But if this is the case, if one of you passed, the surviving sibling would take everything..
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But if it doesn't have the "survivorship clause", the the deceased brother's estate would eventually inherit that 1/3.
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It wouldn't do so now because the grantor (i.e. parent) is still alive so the trust doesn't legally disburse assets yet. But if parent passes, then the trust presumably would disburse and someone would have to file a motion to reopen the deceased sibling's estate so it could receive his 1/3 of the trust, which would then go to your parents' estates to then descend back down to you and your living sibling.
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Like I said, very unnecessarily complicated but can be easily fixed as long as parent is still alive to amend the trust to remove the deceased sibling as an heir and just state that if you or your other living sibling pass, their share goes to their children. Simple as that.
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thanks
Barrister
Customer: replied 1 year ago.
I have been out - sorry for the delay. My father has been to his trust atty regarding my deceased brother's estate - most will go back to my dad (my brother worked in my dad's business so that was the source of his IRA and income) who is executor but I am not sure of how much probating there is (except for an issue of him naming a former girlfriend POD but she already died before the fact - she has an 18 yr old daughter but it was not per stirpes just ''pod''). He said nothing about future probate regarding my deceased brother's share (1/3) of the trust just that my surviving brother and I would be sharing 1/2 now. I will have to re-read (been about 4 years) the trust and see if it has the "survivorship clause" as to primary beneficiaries. If the survivorship clause was included is it usually labeled as such or will I have to ascertain that from the language?
Expert:  Barrister replied 1 year ago.
""If the survivorship clause was included is it usually labeled as such or will I have to ascertain that from the language?""
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Typically it will be set out in its own paragraph that deals with gifts lapsing or whether they continue on down through the beneficiary's estate.
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thanks
Barrister
Customer: replied 1 year ago.
Thanks, ***** ***** your help.
Expert:  Barrister replied 1 year ago.
You are very welcome. Glad to help any time..
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thanks
Barrister

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