How to determine who is entitled to inherit?

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How to determine who is entitled to inherit?

My great aunt set up a trust at a bank for my mother and uncle back in the 50’s. She passed away and the trust was in my mothers and uncles name. When my uncle passed away his half went to his 3 children. The Will of my great aunt stipulated beneficiaries down to the children of my mother and uncle. Although the trust is “in name” my mother and uncle, my mother is sole beneficiary. My sister and I are secondary beneficiaries. The Will does not state children of beneficiaries (my daughter or her children). As my sister had passed away 2 years ago, would her 1/2 go to her 2 children or does it pass to me as I am the only stated beneficiary in the Will/Trust of my great aunt? Or is probate court involved?

Asked on January 9, 2013 under Estate Planning, Rhode Island

Answers:

Catherine Blackburn / Blackburn Law Firm

Answered 8 years ago | Contributor

Let me see if I can dissect this for you.  First, a trust is separate from a will.  The funds held in trust for your mother will be distributed according to your great aunt's trust (and it sounds like these are the only funds remaining in the trust).

Your great aunt's will probably has nothing to do with anything now.  The will would have distributed your aunt's estate assets, and then the estate would have been closed.  I don't know how long ago she died, but it is likely that all estate assets have been distributed.  If you great aunt prepared a fairly common "estate plan," then the assets from her estate probably "poured over" into her trust.  This means the estate assets were passed into the trust.  Your mother's 1/2 of the trust appears to remain with the bank.

Do you have a copy of the Trust Agreement?  If so, you can have a lawyer read it and explain with certainty what will happen.  I can tell you what probably will happen based on what you have said, but I have not seen the Trust Agreement itself.

It is common for a trust agreement to say that assets will be held in trust and distributed 1/2 to mother and 1/2 to uncle, and upon the death of either, their share will be distributed to their children - that is, you and your sister.  Most lawyers (and clients) do not want to create a perpetual trust.  Therefore, most trust agreements provide that the remaining principle will be distributed outright to someone - in this case it sounds like it will be distributed outright to the grandchildren.

It is common to provide for what happens if one of the grandchildren is deceased.  The trust agreement could say that the remaining principle will be distributed to "the grandchildren or survivor of the grandchildren," or "to the grandchildren" and "if one of the grandchildren fails to survive, this gift will lapse."  This means that your sister's share will be distributed to you.  This kind of provision is less common than the next one.

Another, more common provision, is to say that the remaining principle of the trust will be distributed to the grandchildren and their descendants "per stirpes."  This means if one of the grandchildren passes away before receiving her share, her share will go to her children.

If you have a copy of the trust and the words of the trust match one of the common provisions I listed, then you know what will happen.  If you don't have a copy of the trust, then you need to get one in order to find out what will happen.

Is your mother still living?  If so, she is entitled to a copy of the trust.  If not, you are entitled to a copy of the trust.  Beneficiaries are entitled to a copy.

There may be provisions that allow your mother a "power of appointment" over the trust assets.  If so, your mother may be able to direct where the remaining principle will go upon her death.  You and your mother will need to consult with a trust lawyer in your area to help you make this "appointment."  It is not a difficult process, but lay people rarely understand enough to make the appointment effectively.

I suggest you and your mother (if possible) consult a trust lawyer in your area to help you.  It should not cost much for the lawyer to get a copy of the trust, explain its provisions, and help you decide what, if anything, to do.


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