Can you create a trust and have the successor trustee name beneficiaries after you die?

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Can you create a trust and have the successor trustee name beneficiaries after you die?

I have a friend who has no family that he is close to. He wants to create a trust wherein his successor trustee will have the authority to name a charitable organization as a beneficiairy after the maker dies. However, he does not want a charitble trust because its irrevocable and he may change his mind later about his family. However, I read that in order for a trust to be valid you need trustee, corpus and benes. The trust will have a bene but not until after the successor trustee select one. Can this work?

Asked on August 6, 2012 under Estate Planning, California

Answers:

Cameron Norris, Esq. / Law Office of Gary W. Norris

Answered 9 years ago | Contributor

First of all charitable trusts can be revocable, but they are irrevocable if the distributions begin during the trustor's lifetime.  Just tell him to get an attorney to write a revocable charitable trust.  It's not hard.

Also, the trust has to have a named beneficiary.  You could also create a trust with a beneficiary (in secret your successor trustee) who gets the corpus.  Then you make a private agreement that the beneficiary will donate the money-taxes to a charity of his choice.  The problem is that you have no way of ensuring the trustee won't just take the money, because this side private agreement isn't really enforceable. 

Any trust leaving an "open" beneficiary subject to the trustee's choice could be attacked as ambiguous by your friend's family members.  That said, it might be upheld if he names a specific enough type of charity.

He could name a sucessor trustee, name himself as beneficiary of 99% of his own trust, and also name a 1% beneficiary.  Then write a separate "distribution of remainder" paragraph indicating that in the event that the full distribtuion of the entire estate is prevented by the pre-distribution death of any beneficiary(ies), that beneficiary's(ies') share shall be distributed to a _____(select type, i.e. Religious, Educational, ASPCA-related, etc.) charity as selected by the trustee.  The remaining portion shall not be distributed to the issue of the beneficiar(ies) according to the laws of succession of the state of California.

Your friend is really delving into some pretty complicated trust matters and should consult an attorney before relying on it to do what he wants.

Best of luck.


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