Where to start when setting up a trust?
August 23, 2013 11:19 AM   Subscribe

My mother has asked me to help her with setting up a trust for some assets. I get that I should contact a lawyer, but where should that lawyer be based?

My mother lives in NM and is a shareholder in a family business in AZ (this is all in the USA). She would like those shares to be placed into a trust. I live in CA and am likely to be the trustee. I see from reading other posts that laws may vary from state-to-state. Which states laws would apply to this trust? Do we have a choice? In which state should the lawyer be based?

posted by doctord to Work & Money (7 answers total) 3 users marked this as a favorite
Best answer: I'd hire a lawyer in Arizona. Shares are an intangible asset and jurisdiction over them can be a tricky legal issue, but there isn't much question in my mind that a trust in Arizona where the business itself is located will be fine for that purpose. Talk to the lawyer about what state law can be applied to an Arizona trust -- possibly that could be a term of the trust document.

IANYL, of course. But that's what I'd do.

And I'm sorry about your bad experience, kinetic, but clearly drawn trusts are like clearly drawn contracts -- they save a lot of grief later and can be a great mechanism for avoiding the costs and delay of probate.
posted by bearwife at 11:43 AM on August 23, 2013

So get a very good lawyer.

Always good advice! But, and in no way meaning to discount Kinetic's experience, preservation of the trust corpus, even against legal challenges, can be an example of a trust that was properly created by a very good lawyer--and if Tom and Dick are named, but not beloved Harry, the trust "works" if Harry gets nothing. But again, I am in no way disparaging Kinetic's experience and her well-placed warning.

The trust does not have to be in the same jurisdiction as you, your mother, the business, or the lawyer. It's a legal "entity" and can be sited anywhere. Here's a quickly googled article for you.

That said, if it were me, I'd personally find a trusts and estates lawyer where your mother is, since she is the client, and can meet with him/her in person. You should feel free to dial in to the meeting or attend in person, provided your mother and the lawyer consent (again, she is the client, not you).

I am not your lawyer, and this is not legal advice.

Good luck!
posted by Admiral Haddock at 11:47 AM on August 23, 2013 [1 favorite]

You should probably try the California Bar Lawyer Referral Service or something similar offered by the New Mexico Bar. A lawyer from either one should be able to advise you about the various benefits of setting up a trust in either state; you might want to prepare yourself to hire two lawyers: one to advise you (cheaply, briefly) on which state is best, and then one to actually do it in that state. Good luck.

As to kinetic's situation: with respect, and hopefully not to sound harsh, directing one's assets in this way is sort of the point of the trust, and I would argue that the children have had a "really horrible experience" with the grandfather and/or the father, rather than the trust per se. If the kids' father is still living, he is the named beneficiary of his father's trust and that is that. It does serve as a good object lesson, I suppose, that your mother should be careful in designating the beneficiaries of her trust when it is established.
posted by Joey Buttafoucault at 11:49 AM on August 23, 2013

A good lawyer will point this out early, but you should be aware that California takes an extremely broad view of what is taxable (including the location of the trustee).

I'd also recommend finding a local (New Mexico) lawyer. The trust could be in AZ, NM, CA, or none of the above (for example: Delaware), but it's nice to have local counsel.
posted by 2bucksplus at 11:54 AM on August 23, 2013

Your mother lives in New Mexico. She needs to see a New Mexico attorney. The trust can itself declare which laws will ultimately apply. The NM attorney may want to consult with an Arizona attorney to see whether there are any wrinkles as to the shares. Some law firms have that capacity in-house.
posted by megatherium at 2:30 PM on August 23, 2013

Another vote for New Mexico or Arizona. Is there an attorney that already handles matters for the Arizona based business? If so, talk to them.
posted by ocherdraco at 5:33 PM on August 23, 2013

Response by poster: Thanks everyone!
posted by doctord at 5:43 PM on August 23, 2013

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