Bleak House?

January 16, 2011 7:55 PM

Living trust, probate, ack, what does this all mean?

My mother has named me and my brother as beneficiaries of her estate. Her assets (which really only include a mortgaged house) are in a living trust, my brother and I are the beneficiaries.

There is another sibling, who is not a beneficiary. This other sibling is yelling about going to probate and contesting the will if she is left out. I do not know the contents of the will. All I know is that I will be the executor of the estate.

My understanding is that as long as a will states how the assets are divided and there is a living trust, the estate will not go into probate, nor will there be grounds for contesting. Am I correct?

I think this is all ghoulish since my mother is still alive. Recent circumstances have prompted my brother to ask me about this, and I really did not have an answer. I am not interested in the estate nor am I interested in contacting an attorney at this time.

Can anyone give me an idea as to what to expect?

posted by fifilaru to law & government (14 answers total)

Bottom line: Anyone can sue for anything.

That said, hopefully your mother has done her homework and her trust/will situation will hold up in court, but that doesn't mean it won't possibly cost you some money to honor her intentions.

If she contests it, hire an attorney with funds from the trust. I don't believe the other sibling can do anything until your mother passes away (sorry, don't know how else to say that)...
posted by HuronBob at 8:06 PM on January 16, 2011

Are you in the US? Probate is where wills go. I mean, that's literally all that probate is for. You take the will to probate to hand out the assets and so forth.

And there are ALWAYS grounds for contesting. It's even possible that she has legit grounds; some states make it difficult to disinherit a child without following very specific steps.

I hate living trusts with a holy passion, so I can't say too much about that, but they don't tend to simply estate settling much. If your mother's only asset is a mortgaged house, why is the estate set-up so complicated, why is she disinheriting a child, and why is this child raising holy hell? (Is the emotional situation really so fraught that she'd sue over an estate without really any assets?) Without more information, my mind immediately goes to "she got bad advice." I almost always advise against completely disinheriting a child, though not all lawyers agree, and it's hard to think of reasons why a will and living trust is necessary with basically one asset.
posted by Eyebrows McGee at 8:18 PM on January 16, 2011 [2 favorites]

I am pretty independent from my mother, so I do not know if she has other assets. Since she is a retired civil servant I can't imagine that she would. I do not know why she set up the trust, she just told me she did. The house is only valued at about $140,000 and it probably has a $60,000+ mortgage on it. I really don't view this as an estate worth fighting over, but my brother does.
posted by fifilaru at 8:24 PM on January 16, 2011

I am not interested in the estate

IANYL. In your shoes, I would decline the designation as executor (your jurisdiction will probably have a form you have to file with the court supervising probate) and disclaim any assets left to you. Let the people who want the assets fight for them without involving you. To make this quick and make sure you do everything by the book, you really should speak to a local attorney with wills, trusts, and estates experience.
posted by Inspector.Gadget at 8:40 PM on January 16, 2011 [1 favorite]

I'm not a lawyer, not an accountant, not a therapist. But responding purely as a flinchy layperson to the family dynamics here - you should be referring all questions from your brother and sister to your mother (or, if she's incapacitated, her successor trustee). It's her estate, and they're her decisions to justify, not yours.

I don't mean this to be judgmental or unkind, just analytical: *if* you are having difficulty with the degree of intrasibling tension now, you might want to tell your mother to find an alternative person to designate executrix, because circumstances generally get more emotionally charged, not less so, after a family death.
posted by gingerest at 9:21 PM on January 16, 2011

If you're named the executor, you probably should have a better idea what your mother's intentions are. If you intend to act as executor to the estate*, maybe you should talk to her about it.

I've been told that on top of naming beneficiaries, a will needs to name non-beneficiaries in order to specifically disinherit someone. Otherwise a non-named child or spouse may have a legitimate claim against the estate. This may be a misunderstanding on my part and it may not be applicable where you are. Still, if you're in doubt about the ability of the will to withstand probate, and you want to know more, might be worth checking it out.

*I think Inspector.Gadget has a really good idea up there.
posted by galadriel at 9:21 PM on January 16, 2011

My (very limited) understanding is that a living trust is designed to circumvent the will/probate process. (I think that's what you're saying, right? FWIW, Wikipedia also seems to back that up.) Given that, and that I'm not a/your lawyer, I don't see what your sibling could (legitimately) challenge, IF the trust were set up properly.

Presumably, your mother hired a lawyer to set up the trust. I know you don't want to hire a lawyer, but maybe hers can explain the setup to you, since you're the executor and all. If she did not hire a lawyer, she needs to do so--estate planning without professional help, especially with complications like a living trust and disinheritance (rules for which may vary by jurisdiction), is a risky proposition. I know you don't care about the assets, but if she and your brother do, they should do this right.

I know it seems ghoulish, but it's crucially important to talk this out now, no matter how uncomfortable it may be. It sounds as if she has very specific wishes, and the only way to ensure you honor those is by planning while she's still around.
posted by SuperNova at 9:58 PM on January 16, 2011

fifilaru: "Since she is a retired civil servant I can't imagine that she would."

Don't be surprised if there's a large life insurance or pension payout. But if you're the executor and don't want the money, it sounds like there's an easy solution, if you can live with the tax consequences of "gifting" some of it.
posted by pwnguin at 10:09 PM on January 16, 2011

if you can live with the tax consequences of "gifting" some of it

At least in some places, you can renounce your share of an inheritance without tax implications. The estate is parcelled out as it would have been if you had already died - so there's no need to inherit the money, gift it on and pay tax on the results.

I don't know how a living trust plays into this, or whether this is actually the case where you are.
posted by emilyw at 4:16 AM on January 17, 2011

There is some confusion here. If there is a trust, most likely the will is not going to be used, and there will be no will contest. There will also be no "executor", but there will be a successor trustee. If you do not want to serve in that capacity, I would tell her now so that she may make other arrangements.

It is possible to contest a trust, but only if it can be proven that she did not have proper capacity when she did so. (The rules vary from state to state.)

If there is life insurance or a retirement plan, this will typically be payable directly to one or more beneficiaries, without the involvement of the trust.
posted by megatherium at 5:16 AM on January 17, 2011

"If there is a trust, most likely the will is not going to be used, and there will be no will contest."

Megatherium, if there's a valid will, it HAS to go through probate, EVEN IF there's a trust. Even if there's not a damn thing in the will. Many states have a process by which will with very tiny assets can essentially be probated through affidavits, much more quickly and cheaply, but it'll still have to go through the process. That's part of why I have questions about whether the testator here got good advice, or whether the OP is confused by the terms.

(I'm also always leery of living trusts because they don't do very much good for the vast majority of people, but they make lawyers a fair amount of money, much more than a will, and there's a subset of late-night-TV-advertisement-type lawyers in my state who push living trusts as the cure for everything from long probate (living trusts can take forever to settle too) to taxes (sometimes in fraudulent, federal PMITA prison ways) to "publicity" about the estate (just ... no.). In some cases they make excellent sense, but I've seen too many scams, and I've dealt with too many clients who say, "so I heard about a living trust and how it's probably right for me ..." ... it makes me feel sympathy for doctors dealing with Rx ads.)
posted by Eyebrows McGee at 6:24 AM on January 17, 2011

It is my understanding that if there is a trust there has to be a will and the will is very simple and only says "all my assets shall go to my trust." So there is no dividing among siblings in the will. Only the trust. Her lawyer should be able to tell you if it is set up that way so you are clear on that point.

IANAL
posted by cda at 6:31 AM on January 17, 2011

cda, that's typically called a testamentary trust (or a pour-over will); a living trust, if that is indeed what the OP's mother has, is a different creature. (And I have nothing against testamentary trusts whatsoever; as most of my clients had minor children, I put them in just about every will I wrote.)

I think everyone's of the consensus, though, that you'd have to discuss it with your mother and/or her lawyer to find out her intentions AND get the specifics on how she set it up. :)

I'd also make sure she realizes that by disinheriting one child, she is basically ensuring that she will destroy the sibling relationships the two of you have with the third child. I've literally had a client say, "What do I care? I'll be dead." But she does need to understand that she'll most likely be breaking the sibling relationship irrevocably by her actions. Depending on why the third child is being disinherited, that may be fine with y'all. But it may not be.
posted by Eyebrows McGee at 6:44 AM on January 17, 2011 [1 favorite]

It may depend on the state, but in Florida, a testamentary trust is not the same thing as a pour-over will, which usually accompanies an living trust (pouring over or transferring those assets not transferred into the trust prior to death). Also, if there are no probatable assets, there is no probate, but if there is a trust, a Notice of Trust must be filed.

Also, again, depends on the state, but trusts can be challenged on many of the same bases as wills: lack of testamentary capacity, undue influence, failure to execute in conformity with law, etc.

Also, it's not necessary and may be awkward to discuss mum's wishes now just because you are the named executor. As executor, you are charged with following the terms of the will (usually a lawyer guides you with that), which ideally, should be your mum's wishes, but may not be (as Eyebrows alluded to).

Depending on your relationship with mum, you may encourage her to have her estate plan reviewed and/or updated. A good estate planner can minimize the success of a contest.

That said, anybody can sue and sometimes, protracted litigation is unavoidable.
posted by Jezebella at 8:33 PM on January 17, 2011