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Richard, Attorney
Category: Estate Law
Satisfied Customers: 55296
Experience:  29 years of experience practicing law, including tax and estate planning.
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2 questions 1) I am the trustee of an irrevocable asset mgmt

Customer Question

Hi - 2 questions
1) I am the trustee of an irrevocable asset mgmt trust and am also the beneficiary -- the grantors are deceased. At what point do I become the beneficiary and not the trustee? There is a house I am selling - should I sign forms as owner as the trustee or just my name? Does it matter? (The trust is NY state.)
2) Secondarily, if I put the proceeds of the house into a joint account (Maryland), is it considered joint property at that time or an inheritance? And if it's an inheritance (which state law prevails there, NY or MD?) - how do you track the amount over time that is the 'inheritance' and still only my money?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Richard replied 1 year ago.

Hi! My name is ***** ***** I will be helping you today! It will take me just a few minutes to type a response to your question. Thanks for your patience!

Expert:  Richard replied 1 year ago.

1) As long as the property is owned by the trust, you are the trustee and you would sign any documents to sell the house as trustee. The proceeds of the sale would go to the trust since it's the owner of the property. Then, as trustee, you could distribute the proceeds to yourself as beneficiary.

2) If the trust owns the house, then the trust would sell the house unless you, as trustee, transferred ownership of the house to yourself as beneficiary before the sale. Once the proceeds from sale have been distributed to you as beneficiary, if you put them into a joint account, then they would become commingled with marital assets and could lose their status as your sole and separate property. To protect yourself, you want to retain the proceeds in an account in your name only as your sole and separate property. Once the money is out of the trust, the applicable law would be where you live.

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Customer: replied 1 year ago.
Thank you for the information. How much of this is based on the state's laws, i.e., the Trust is New York State, the accounts are in Maryland? And, where do you practice?1) The trust reads: the trust terminates upon the death of the Grantors. So does that mean the trustee has to transfer title, etc. of the house to the beneficiary before it becomes the beneficiary's property?2) Also, to follow up on the joint account question: I have a legal settlement that was in my brother's account and it was to be transferred on death to me (TOD). So I received the check and put it in a joint account - is this now legally commingled as joint property or still considered my inheritance and belongs to only me? (I just want to know the technical answers - I would do a joint account anyway, so it is not a problem - just need to know the legal answers.)Same question for a life insurance benefit for which I am beneficiary... again, is this NY law or MD law that dictates, and do you know those state laws? (I know you said Maryland, just have to be positive - that's why I am giving you these add'l scenarios.)
Expert:  Richard replied 1 year ago.

You're very welcome. The trust will be controlled by NY law. Once the trust is terminated (i.e., the assets of the trust distributed to you as beneficiary), then the laws of the state of your residence will control. I'm in Texas, but the information I have provided is based on your applicable states.

1) Yes, since the trust is to terminate upon the death of the grantors, as trustee, you should now distribute the assets of the trust to yourself as beneficiary. You would then sell the property as the individual owner. Or, you can let the trust sell the property and distribute the proceeds.

2) As long as so much time as not transpired so that you can't trace the money, you can take it out of the joint account and put it in an account as your sole and separate property. The laws of sole and separate property or marital property are going to be based on the state of your residence.

Customer: replied 1 year ago.
Thank you - I realize these are technical questions - hard to discuss by email - and state-specific as well.Is this a correct statement: When a grantor dies, and the trust is 'terminated', it isn't in fact terminated until the assets are distributed to the beneficiary(ies). It is not automatic. Until something official is done, I should sign any papers (in the sale of the house) as trustee, as I am not yet the owner, the trust remains the owner. (though I don't know how the trustee gives the house to the beneficiary... but I guess I can wait on that...)The joint assets question I can see is not an easy straightforward answer, so I won't follow up with that - except would you re-read your first sentence to that follow up and see if it reads the way you wanted it to? I didn't understand what you meant there.Thank you.
Expert:  Richard replied 1 year ago.

Yes, that is a correct statement. If you wanted to transfer the house from the trust to you as beneficiary, you would sign a quit claim deed, with the trust as grantor (and you would sign as trustee of the trust) and yourself as grantee. The deed would need to be witnessed, notarized, and then recorded in the real property records of the city/county in which the property is located.

On the joint account, the longer time that passes, the harder it is to trace it specifically. But, if you just recently put the money in a joint account, it is easily traceable, you can take it out and put it in an account to keep its status as your sole and separate property. But, as time goes by and money goes in and out of the joint account, it will be considered most likely to be commingled.

Expert:  Richard replied 1 year ago.

I just wanted to let you know that I will be away at a meeting for the next hour or so. Should you have a follow up while I’m away, I will address it immediately upon my return. Thank you in advance for your patience. I apologize for any inconvenience.

Customer: replied 1 year ago.
I think I'm okay for now. Thank you very much for your time and expertise.

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