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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Estate Law
Satisfied Customers: 116705
Experience:  Experienced in Trust and Succession Law, including Louisiana Laws
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I have a question about springing beneficiaries in

Customer Question

I have a question about springing beneficiaries in California revocable trusts. Namely... do they work? For example:
If, at some unforeseeable point in the future, my son ***** ***** can demonstrate that he has no active state or federal tax lions or levies, and no Notice of Intent to File a state or federal lies or levy has been generated against him in the preceding 90 days, then ***** ***** shall become a beneficiary of this trust, entitled to a share of trust assets equal to all other beneficiaries. If Jim is named a beneficiary by means of part X above and at any time a notice of delinquent taxes from any state or federal agency is generated against him, ***** ***** shall as of that date no longer be a beneficiary.
Clearly, my son has problems with tax liens/levies, and I'd like to keep him out of the trust as long as those problems persist. I've read that this "springing beneficiary" concept is valid in Texas, but I cannot find reference for California. Thank you!
Submitted: 1 year ago.
Category: Estate Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
Actually, in CA there is no such springing beneficiary and also, if there is a notice of delinquent taxes or debt, even on a revocable trust with a springing beneficiary and the beneficiary is already the beneficiary, if you try to remove him from beneficiary, the creditor would be able to recover the money from the revocable trust based on the person being the beneficiary.
If you want to protect your trust, then you use the ultimate asset protection tool, which is the irrevocable trust. The Irrevocable trust means that neither your beneficiaries or your creditors can touch what is in the trust because as an irrevocable trust it is considered its own separate entity. This means the property in your trust belongs to the trust and not to you or your beneficiaries. In the trust you can dictate your terms regarding distribution and beneficiaries.
The irrevocable trust's only problem to some people is that irrevocable means just that, once formed it can only be dissolved with agreement of the trustee and beneficiaries and proof to the court that the trust cannot continue to carry out its intended purpose any longer. Otherwise, the grantor can only change the terms of the trust and even beneficiaries, but cannot dissolve the trust.