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RayAnswers
RayAnswers, Attorney
Category: Estate Law
Satisfied Customers: 40081
Experience:  Texas lawyer for 30 years in Estate law
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My father in law passed away in 1989. A shelter trust was

Customer Question

My father in law passed away in 1989. A shelter trust was established according to his will naming my mother in law as beneficiary and my husband (his son) as trustee. My mother in law passed away in 2013 and there were no instructions in her will as to the disposition of the trust except that my husband be appointed trustee and his sister be appointed executrix. Is there any benefit to maintaining the trust??...If not how would we go about dissolving the trust and who would bear the tax liability when we distribute the remaining assets??
Submitted: 10 months ago.
Category: Estate Law
Expert:  RayAnswers replied 10 months ago.

Hi and welcome to JA. Ray here to help you today.

If the trust here has assets and needs to be dissolved you will need a lawyer here to motion the court to do so.The court can approve this if there has been a change of circumstances and the trust is no longer viable or there is no need for it.The trustee here can obtain the lawyer, pay the lawyer and the taxes due out of the trust before any of the heirs get paid.You would start with a trust lawyer where the father in law deceased and the trust was created.The court can step in anytime the trust no longer makes sense and there is nothing specific about dissolving here.

Your lawyer can motion here for court approval to dissolve it here after payment of legal fees and any taxes due here.Your husband should also be due a court approved fee for his work for the trust.The lawyer can help him submit this for approval too.

I appreciate the chance to help you today.Thanks again.

Expert:  RayAnswers replied 10 months ago.

Surrogate Court is where you file here is the law

-1.19 - Application for termination of uneconomical trust.

§ 7-1.19 Application for termination of uneconomical trust (a) Notwithstanding sections 7-1.5 and 7-2.4 of this article or any other contrary provision of law: (1) Any trustee or beneficiary of a lifetime or testamentary express trust (other than a wholly charitable trust) may, by application to the surrogate's court having jurisdiction over the trust, seek a termination of such trust when the expense of administering the trust is uneconomical. (2) If, upon such application, the court finds that continuation of the trust is economically impracticable, that the express terms of the disposing instrument do not prohibit its early termination, and that such termination would not defeat the specified purpose of the trust and would be in the best interests of the beneficiaries, the court may make an order or decree terminating the trust and directing the distribution of the trust assets to and among those beneficiaries who at the time are entitled (or entitled in the discretion of the trustee) to the income and/or principal of the trust and those beneficiaries who would be entitled (or entitled in the discretion of the trustee) to the income and/or principal of the trust if it were to terminate immediately before such order or decree. The distribution of the trust assets shall be made in such manner, proportions and shares as in the judgment of the court will effectuate the intention of the creator. (b) Notice of the application shall be given to such persons and at such time and in such manner as the court, in its discretion, may direct. (c) If the application or the possibility of the application of this section to any trust would reduce or eliminate a charitable deduction otherwise available to any person under the income tax, gift tax, estate tax or generation-skipping transfer tax provisions of the United States Internal Revenue Code, or the laws of any state of the United States or of the District of Columbia, this section shall not apply to such trust. (d) This section shall not apply to a supplemental needs trust which conforms to the provisions of section 7-1.12 of this part.

Expert:  RayAnswers replied 10 months ago.

Lawyer Referral and Information Service
1(###) ###-####br />*****@******.***

Trust lawyer for you here above to file.

Expert:  RayAnswers replied 10 months ago.

Trustee gets paid here too for his work

Trustees are entitled to annual commissions as well as commissions based upon amounts paid out. SCPA §2309(2) provides that Trustees are entitled to annual Commissions at the following rates:

(a) $10.50 per $1,000 or major fraction thereof on the first $400,000 of principal.

(b) $4.50 per $1,000 or major fraction thereon on the next $600,000 of principal.

(c) $3.00 per $1,000 or major fraction thereof on all additional principal.

Annual commissions may be computed either at the end of the year or, at the option of the Trustee, at the beginning of the year; provided, that the option selected be used throughout the period of the trust. The computation is made on the basis of a 12-month period but is adjusted upward or downward for any payments made in partial distribution of the trust or the receipt of any new property into the trust within that period.
SCPA §2309(3) further provides that annual commissions shall be paid one-third from the income of the trust and two-thirds from the principal, unless the will or trust otherwise directs.

Expert:  RayAnswers replied 10 months ago.

Please let me know if you have more follow up.If you can positive rate when we are done it is always much appreciated.

Customer: replied 10 months ago.
Thank you for your answer....it was very helpful and now I know where to start this process. I have a brief follow up question. At this time, are the funds in the trust available to the trustee for personal use or to distribute to other family members/heirs??
Expert:  RayAnswers replied 10 months ago.

They are available to the trustee for the benefit of the named beneficiaries.The trustee decides what to use the funds for or whether to just terminate the trust through the courts.

Thanks again and the best to you.

Expert:  RayAnswers replied 10 months ago.

If you can positive rate 5 stars when we are done it is always much appreciated.Thanks again.