Skip to main content

Revocable Trust/Sole Trustee is Sole Beneficiary/Rights of Secondary Beneficiaries

Background:
Trust created by grandmother, naming daughter as sole primary beneficiary and also sole trustee. 3 grandchildren secondary beneficiaries. Clause in trust states "I intend for the trust property to be held for the benefit of my grandchildren." Trust was drawn up by daughter's attorney.
Daughter has taken over part of the real estate for herself and it was just discovered she also mortgaged nearly the whole of the real estate for half a million dollars (reverse mortgage), without ever telling anyone. Information was found out by chance while checking registry of deeds.
The grandchildren were always told by the grandparents that the property was intended for them and the grandchildren even paid off a mortgage after the grandparents died, thinking they were the primary beneficiaries.
Has the daughter/trustee/beneficiary done anything wrong? Is there any possibility the grandchildren's rights in the trust property can be preserved in accordance with the grandparents' wishes?

 
Share this with your friends

Revocable Trust/Sole Trustee is Sole Beneficiary

Submitted Thu, 08/19/2010 - 16:42.

This situation is so dependent on the wording of the trust that it is really impossible to answer without reviewing the trust document. You describe the daughter as the "sole primary beneficiary", but then indicate that the trust was established for the benefit the grandchildren. That language is not necessarily inconsistent - my guess is that your are reading from different areas of the trust. Your grandmother most likely had a different set of objectives for when daughter was living and when daughter was not living.

You need to look at the provisions of the trust controlling the distributions of trust principal and income during the life of the daughter. The court will look at that language when determining whether the daughter exceeded her authority (as trustee). My guess is that you will find the trustee is given somewhat broad authority to make distributions of income and principal to or for the benefit of the daughter. If the daughter was authorized to act as she did, then there would be no recovery available. If the daughter did not have the authority to act as she did, then the remainder beneficiaries have the right to seek redress in court - which can include her removal as trustee and her having to reimburse the trust. This is really a very tricky area, and I would encourage you to consult with a qualified attorney before you irreparably damage family relations.

Attorney Peter Bernardin

Talk to an Estate Planning Lawyer Today
Most offer FREE Consultations
Connect with The Forum
facebook google twitter linkedin


Forum choice