Irrevocable Trust Transfer

[TamD]

Jurisdiction

Kansas

Can the beneficiary of an irrevocable trust be another irrevocable trust?

Can the Successor Trustee of an irrevocable trust, transfer the assets of the irrevocable trust directly to another irrevocable trust that belongs to the Beneficiary, at the time of the grantors/donors death?

Or, can the original irrevocable trust continue on into the future, intact, with a new Beneficiary having previously been designated in the original irrevocable trust, in the deceased grantors/beneficiary's place?

Thank you.

 

[army judge]

Can the beneficiary of an irrevocable trust be another irrevocable trust?

Can the Successor Trustee of an irrevocable trust, transfer the assets of the irrevocable trust directly to another irrevocable trust that belongs to the Beneficiary, at the time of the grantors/donors death?

Or, can the original irrevocable trust continue on into the future, intact, with a new Beneficiary having previously been designated in the original irrevocable trust, in the deceased grantors/beneficiary's place?

Thank you.

Spend some money, retain the services of a trust and/or estates attorney.

Once you've done that, ask her as many questions as you desire.

Heck, request that she provide you answers in the form of a "written" attorney's opinion.

Don't place your finances at risk by seeking answers from UNKNOWN, anonymous internet entities!!!

 

[TamD]

Spend some money, retain the services of a trust and/or estates attorney.

Once you've done that, ask her as many questions as you desire.

Heck, request that she provide you answers in the form of a "written" attorney's opinion.

Don't place your finances at risk by seeking answers from UNKNOWN, anonymous internet entities!!!

Thank you very much for you advice. I would still like to hear what others have to say before consulting with an attorney. Best Regards, Tam

 

[Tax Counsel]

Can the beneficiary of an irrevocable trust be another irrevocable trust?

That depends on the purpose of the trust, but in most circumstances the answer is yes.

Can the Successor Trustee of an irrevocable trust, transfer the assets of the irrevocable trust directly to another irrevocable trust that belongs to the Beneficiary, at the time of the grantors/donors death?

That depends again on the purpose of the trust along with the details of the trust terms. Most trusts can be set up to do that, if that's desired.

Or, can the original irrevocable trust continue on into the future, intact, with a new Beneficiary having previously been designated in the original irrevocable trust, in the deceased grantors/beneficiary's place?

That too is a possibility. Again, the devil is in the details.

Let's start with the basics here: what is it that you want to achieve here? What is the goal you have in mind? That's the key thing that a lawyer will want to do when advising you as to your options to achieve it.

 

[adjusterjack]

I would still like to hear what others have to say before consulting with an attorney. Best Regards, Tam

Here's what "others" have to say, and will always say for this type of question.

The answers depend entirely on the terms and conditions of the trust.

If you'd care to upload the entire trust document, redacting identifying information, you might get helpful comments.

 

[TamD]

That depends on the purpose of the trust, but in most circumstances the answer is yes.
The purpose of creating an irrevocable Trust would be:
(1) To protect my 91 year old Uncle (never married, no children, no one but my husband and myself to help him...also he is not eligible for Medicaid, Medicare or Social Security) from losing his only source of income (dividend Identity Theft Criminals, creditors and . My 91


That depends again on the purpose of the trust along with the details of the trust terms. Most trusts can be set up to do that, if that's desired.



That too is a possibility. Again, the devil is in the details.

Let's start with the basics here: what is it that you want to achieve here? What is the goal you have in mind? That's the key thing that a lawyer will want to do when advising you as to your options to achieve it.

This is what is going on...
The Irrevocable "Interest Only" Trust that we are proposing to create is meant to protect my 91 year old Uncle (never married, no children, no one but my husband and myself to help him and he is currently not eligible for Social Security, Medicare or Medicaid). We recently discovered in February that he had his identity stolen and the dividends that he was living on were diverted by identity theft criminals (we have since been able to return his stock accounts to his control). So, this trust would serve two purposes:
1) Protect his assets from future criminal activity, frivolous lawsuits and creditors;
2) Make sure that when he "passes on" then we (as his only living heirs) would be able to move the irrevocable trust's assets into our own irrevocable trust (my husband has fibromyalgia and although he is only in his early 50's he has already undergone one open-heart surgery).

We are on a very tight budget. So, our goal is to work up a Irrevocable Interest Only Trust that accomplishes the above stated goals and then present it to an attorney that can "fine tune" it for us.

Thank you very much for all of your input and suggestions.

 

[TamD]

Here's what "others" have to say, and will always say for this type of question.

The answers depend entirely on the terms and conditions of the trust.

If you'd care to upload the entire trust document, redacting identifying information, you might get helpful comments.

Thank you very much for getting back to me. We do not have an irrevocable trust available to upload at this time. I have added an explanation to what we are trying to accomplish in the comment above.
Best Regards.

 

[adjusterjack]

A quick read of a description of an IIOT leads me to conclude that, yes, it could accomplish the two things you would like it to accomplish.

What else would you like to know?

 

[TamD]

A quick read of a description of an IIOT leads me to conclude that, yes, it could accomplish the two things you would like it to accomplish.

What else would you like to know?

Thank you so much for the letting me know. It is always nice to know that something can be done before trying to do it.

I was wondering if you could please recommend a good (boiler plate) Irrevocable Income Only Trust that would be a good base to work from when we begin creating our own Irrevocable Income Only Trust?

Thank you so much for all of your help.

 

[TamD]

I was wondering if anyone could please recommend a good (boiler plate) Irrevocable Income Only Trust that would be a good base to work from when we begin creating our own Irrevocable Income Only Trust?

Thank you so much for all of your help.

 

[adjusterjack]

A lawyer has the boilerplate trust on his computer. If you brought one that you pieced together from the internet, it would probably be all wrong and he would toss it and start from scratch anyway.

If you are concerned about attorney fees it would probably cost you more money for an attorney to review what you have done and then start all over.

Make a list of what you want done and get an attorney to do it right.

PS: I edited out your email address. This is a public site and spammers are here all the time looking for victims.

 

[TamD]

A lawyer has the boilerplate trust on his computer. If you brought one that you pieced together from the internet, it would probably be all wrong and he would toss it and start from scratch anyway.

If you are concerned about attorney fees it would probably cost you more money for an attorney to review what you have done and then start all over.

Make a list of what you want done and get an attorney to do it right.

PS: I edited out your email address. This is a public site and spammers are here all the time looking for victims.

Thank you so much for the advice, and for removing my email address.
Best Regards.

 

[zddoodah]

Can the beneficiary of an irrevocable trust be another irrevocable trust?

Yes.

Can the Successor Trustee of an irrevocable trust, transfer the assets of the irrevocable trust directly to another irrevocable trust that belongs to the Beneficiary, at the time of the grantors/donors death?

This question doesn't make sense. For starters, whether the trustee of a particular trust can do something is not possible to answer in the abstract. If your intent was to ask whether such a transfer would be legal or appropriate, that's obviously impossible to know without reading the trust instrument. I'm also not sure what you mean when you refer to a "trust that belongs to the eneficiary."

Or, can the original irrevocable trust continue on into the future, intact, with a new Beneficiary having previously been designated in the original irrevocable trust, in the deceased grantors/beneficiary's place?

Again, impossible to answer without reading the trust instrument.

Nothing you described is a DIY project. Consult with a local attorney.

 

[TamD]

Yes.



This question doesn't make sense. For starters, whether the trustee of a particular trust can do something is not possible to answer in the abstract. If your intent was to ask whether such a transfer would be legal or appropriate, that's obviously impossible to know without reading the trust instrument. I'm also not sure what you mean when you refer to a "trust that belongs to the eneficiary."



Again, impossible to answer without reading the trust instrument.

Nothing you described is a DIY project. Consult with a local attorney.

Thank you!

 

[TamD]

Hello,
We have attached a redacted copy of our Irrevocable Trust as suggested by "adjusterjack".

Here is a recap from our initial inquiry:

Can the beneficiary of an irrevocable trust be another irrevocable trust?

Can the Successor Trustee of an irrevocable trust, transfer the assets of the irrevocable trust directly to another irrevocable trust that belongs to the Principal Beneficiary, at the time of the grantors/ death?

Or, can the original irrevocable trust continue on into the future, intact, with a new Income Beneficiary having previously been designated in the original irrevocable trust, in the deceased grantors/Income Beneficiary's place?

This is what is going on...
The Irrevocable "Interest Only" Trust that we are creating is meant to protect my 91 year old Uncle (never married, no children, no one but my husband and myself to help him and he is currently not eligible for Social Security, Medicare or Medicaid). We recently discovered in February that he had his identity stolen and the dividends that he was living on were diverted by identity theft criminals (we have since been able to return his stock accounts to his control). So, this trust would serve three purposes:

1) Protect his assets from future criminal activity, frivolous lawsuits and creditors;

2) Keep his income taxes as low as possible as he is on a very tight budget;

3) Make sure that when he "passes on" then we (as his only living heirs) would be able to move the irrevocable trust's assets into our own irrevocable trust (my husband has fibromyalgia and although he is only in his early 50's he has already undergone one open-heart surgery).

We, ourselves, are on a very tight budget and unfortunately, the local attorneys that we have contacted have a per hour rate beyond our budget... as my 91 year old Uncle's ongoing expenses and our own monthly expenses (while we are here financially supporting and helping Uncle and not at home working) have depleted our finances. So, our goal is to work up an Irrevocable Interest Only Trust that accomplishes the above stated goals.

We have uploaded a copy of the redacted Trust Document that we, ourselves, have written... if anyone might be kind enough to review it and tell us what they think? We would deeply appreciate any constructive feedback.

Thank you very much for your time, your trouble and for your consideration.

 

[adjusterjack]

Disclaimer: I am not an attorney. I don't give legal advice. I just make helpful comments. If you act on those comments without the advice of an attorney you do so at your own risk.

I'll answer your questions with a layman's interpretation along with comments.

I take it that you are Jane Doe, the beneficiary, and John Doe, the trustee is your husband. And desire is to inherit all of Uncle John's assets when he dies.

Can the beneficiary of an irrevocable trust be another irrevocable trust?

Yes. But you have to specify that in the trust.

Can the Successor Trustee of an irrevocable trust, transfer the assets of the irrevocable trust directly to another irrevocable trust that belongs to the Principal Beneficiary, at the time of the grantors/ death?

Not directly.

Paragraph 22 says that the trust property is to be paid to Jane Doe upon the death of John Smith. A house will be deeded from the trust to Jane Doe, in her name. Money will be paid to Jane Doe.

Jane Doe is then free to convey the property and any money into a trust of her own.

Or, can the original irrevocable trust continue on into the future, intact, with a new Income Beneficiary having previously been designated in the original irrevocable trust, in the deceased grantors/Income Beneficiary's place?

I'm saying no to that for two reasons.

1 - There is nothing in the trust that says that is an option. If a trust doesn't specify that something is an option, then there is no such option.

2 - Upon the death of John Doe all of the trust's assets are to be conveyed to Jane Doe. Once that happens the trust terminates. Again, Jane Doe is free to reconvey the assets into her own trust or create a new trust with new beneficiaries.

As for the purposes:

1) Protect his assets from future criminal activity, frivolous lawsuits and creditors;

I believe that the trust will accomplish that for any assets owned by the trust. However, once he receives income from the trust, that income can still be vulnerable and he, as an individual, can be subject to lawsuits and creditors.

By the way, I hope that the house gets "deeded" to the trust, and the titles to any vehicles retitled in the name of the trust, as well as any bank or investment accounts.

I noticed a paragraph saying that property was transferred and received. Make sure to follow through with an actual change of ownership.

2) Keep his income taxes as low as possible as he is on a very tight budget;

The trust pays taxes on the income, possibly higher taxes than the individual. Check into that.

3) Make sure that when he "passes on" then we (as his only living heirs) would be able to move the irrevocable trust's assets into our own irrevocable trust

Again, not directly. The trust's assets get conveyed to Jane Doe. Jane can then convey the assets into her own trust provided that her own trust allows the conveyance into her trust.

Paragraph 5 of the Smith trust allows for that. Jane Doe's trust should have a similar paragraph.

So, our goal is to work up an Irrevocable Interest Only Trust that accomplishes the above stated goals.

So this is just a proposed document. An actual trust doesn't exist yet? Knowing that, here are some additional comments.

Paragraph 2 - No, it's not a life estate. Do an internet search for another way of wording that. I cannot be that specific.

Paragraph 3 - Make sure each asset becomes owned by the trust. Deed, titles, accounts, all have to be renamed to reflect the trust ownership. Just saying that something is owned by the trust doesn't count even if it's listed in the trust.

Paragraph 6 - Seems to me that paragraph makes the trust revocable. The word irrevocable means that the trust does not get amended or terminated during the life of the settlor. That being said, there are ways to effectively amend or terminate an irrevocable trust. Read the following article.

Can an Irrevocable Trust Be Amended? Here Are 5 Ways - Doane & Doane (doaneanddoane.com)

That's going to require something of a re-write. Looks like you don't need Paragraph 6 since you have Paragraph 21.

Paragraphs 7, 11, 14 and 16 - Looks self serving and an opportunity to raid the trust. I don't like them. But that's just me.

Paragraph 18 - I have no idea what you are trying to accomplish with that one. Looks like it's making the trust revocable.

Paragraph 20 - The intended beneficiary is obviously you. Name yourself as beneficiary lest some relative come out of the woodwork saying "I spent lots of time helping Uncle John on his farm. Prove I didn't." If you think you can't afford a lawyer now, that kind of litigation will put you in the poorhouse.

There is always the possibility that I have missed something or that I am wrong about something so I suggest, if you are going to do this without a lawyer, you study up on irrevocable trusts as much as you can.

You have referred to your goals and what you want.
What does Uncle John want?
Has he read the proposed trust?
Does he understand what it means to give up control of everything he owns?
Is he even mentally competent at 91 to create a trust.

 

[TamD]

Disclaimer: I am not an attorney. I don't give legal advice. I just make helpful comments. If you act on those comments without the advice of an attorney you do so at your own risk.

I'll answer your questions with a layman's interpretation along with comments.

I take it that you are Jane Doe, the beneficiary, and John Doe, the trustee is your husband. And desire is to inherit all of Uncle John's assets when he dies.



Yes. But you have to specify that in the trust.



Not directly.

Paragraph 22 says that the trust property is to be paid to Jane Doe upon the death of John Smith. A house will be deeded from the trust to Jane Doe, in her name. Money will be paid to Jane Doe.

Jane Doe is then free to convey the property and any money into a trust of her own.



I'm saying no to that for two reasons.

1 - There is nothing in the trust that says that is an option. If a trust doesn't specify that something is an option, then there is no such option.

2 - Upon the death of John Doe all of the trust's assets are to be conveyed to Jane Doe. Once that happens the trust terminates. Again, Jane Doe is free to reconvey the assets into her own trust or create a new trust with new beneficiaries.

As for the purposes:



I believe that the trust will accomplish that for any assets owned by the trust. However, once he receives income from the trust, that income can still be vulnerable and he, as an individual, can be subject to lawsuits and creditors.

By the way, I hope that the house gets "deeded" to the trust, and the titles to any vehicles retitled in the name of the trust, as well as any bank or investment accounts.

I noticed a paragraph saying that property was transferred and received. Make sure to follow through with an actual change of ownership.



The trust pays taxes on the income, possibly higher taxes than the individual. Check into that.



Again, not directly. The trust's assets get conveyed to Jane Doe. Jane can then convey the assets into her own trust provided that her own trust allows the conveyance into her trust.

Paragraph 5 of the Smith trust allows for that. Jane Doe's trust should have a similar paragraph.



So this is just a proposed document. An actual trust doesn't exist yet? Knowing that, here are some additional comments.

Paragraph 2 - No, it's not a life estate. Do an internet search for another way of wording that. I cannot be that specific.

Paragraph 3 - Make sure each asset becomes owned by the trust. Deed, titles, accounts, all have to be renamed to reflect the trust ownership. Just saying that something is owned by the trust doesn't count even if it's listed in the trust.

Paragraph 6 - Seems to me that paragraph makes the trust revocable. The word irrevocable means that the trust does not get amended or terminated during the life of the settlor. That being said, there are ways to effectively amend or terminate an irrevocable trust. Read the following article.

Can an Irrevocable Trust Be Amended? Here Are 5 Ways - Doane & Doane (doaneanddoane.com)

That's going to require something of a re-write. Looks like you don't need Paragraph 6 since you have Paragraph 21.

Paragraphs 7, 11, 14 and 16 - Looks self serving and an opportunity to raid the trust. I don't like them. But that's just me.

Paragraph 18 - I have no idea what you are trying to accomplish with that one. Looks like it's making the trust revocable.

Paragraph 20 - The intended beneficiary is obviously you. Name yourself as beneficiary lest some relative come out of the woodwork saying "I spent lots of time helping Uncle John on his farm. Prove I didn't." If you think you can't afford a lawyer now, that kind of litigation will put you in the poorhouse.

There is always the possibility that I have missed something or that I am wrong about something so I suggest, if you are going to do this without a lawyer, you study up on irrevocable trusts as much as you can.

You have referred to your goals and what you want.
What does Uncle John want?
Has he read the proposed trust?
Does he understand what it means to give up control of everything he owns?
Is he even mentally competent at 91 to create a trust.

Hello AdjusterJack,
Thank you so much for your suggestions. You have given us much to think about, and have made many good points that we will have to think about and research further.
In answer to your questions:
Firstly, our unstated goals are for Uncle John to stay happily in his home for as long as possible (he has told us many times that he wishes to remain in his home until he dies), and to help him regain his financial stability again.... pretty much everything else comes after that.
What does Uncle John want?
A: Uncle John wants to feel safe and secure from Identity Theft Criminals and theft in general and for his finances to be set up in such a way that we can handle everything for him so that he does not have to worry that he might be overlooking something. Uncle John would like to have his financial stability back and safely organized so that he can once again concentrate on his research (he translates Egyptian Hieroglyphs and Sumerian Cuneiform) in his home.
Has he read the proposed trust?
A: He has read the proposed trust in it's very rough state, and he has expressed his wishes in the goals we are reaching for. Uncle John has asked us to "handle the situation" and is trusting us to do what is best for him....
Does he understand what it means to give up control of everything he owns?
A: Oh yes.... and frankly it is stressful for all parties are concerned. It is stressful to give up control of one's personal finances... and, it is also stressful for the party who is willing to take on the responsibility of arranging for the ongoing financial stability for a very independently minded adult.
Is he even mentally competent at 91 to create a trust?
A: At age 91 Uncle John is surprisingly cognizant of his situation and the world around him... and while he has a slight speech impediment (like a stroke victim he sometimes uses the wrong words for what he means) he knows exactly what is going on and has very strong opinions about things which he frequently expresses. He "knows the nature and bounty of his estate", and is competent at budgeting his finances. We would consider ourselves lucky to have his cognition at the age of 91.
He may, at some point, need more help than we can give, but right now he is very happy and has no wish to move from the property where he has lived for the past 20+ years... and we are trying to structure his Trust so that whatever happens, his life can move comfortably and predictably forward to the best of everyone's ability.
Thank you again for your very helpful insight and suggestions.
Best Regards,
T & M

 

[adjusterjack]

Very good.

I have more suggestions.

1 - If you have not done so already study up on the Kansas Uniform Trust Code. It's not just a matter of writing up the document.

Chapter 58a.—KANSAS UNIFORM TRUST CODE (ksrevisor.org)

2 - See Steps 16 and 17 at the following link:

Free Kansas Revocable Living Trust Form - PDF | Word – eForms

It's the same for an irrevocable trust and you'll need both.

You and your husband SHOULD NOT be witnesses. Get unbiased third parties who have no stake in the estate in case they need to testify later that Uncle John created the trust freely and understood it.

3 - Once you have the document completed just the way you and Uncle John want it, find a few hundred dollars and take it to a lawyer for final review and execution. The $ you spend on that will be a far cry from the $$$$$$$ that litigation will cost you if you get something wrong.

 

[TamD]

Very good.

I have more suggestions.

1 - If you have not done so already study up on the Kansas Uniform Trust Code. It's not just a matter of writing up the document.

Chapter 58a.—KANSAS UNIFORM TRUST CODE (ksrevisor.org)

2 - See Steps 16 and 17 at the following link:

Free Kansas Revocable Living Trust Form - PDF | Word – eForms

It's the same for an irrevocable trust and you'll need both.

You and your husband SHOULD NOT be witnesses. Get unbiased third parties who have no stake in the estate in case they need to testify later that Uncle John created the trust freely and understood it.

3 - Once you have the document completed just the way you and Uncle John want it, find a few hundred dollars and take it to a lawyer for final review and execution. The $ you spend on that will be a far cry from the $$$$$$$ that litigation will cost you if you get something wrong.

Hello AdjusterJack,
Thank you so very much for your kindness in taking the time to list your extremely helpful suggestions... in order to point us in the right direction. Your suggestions and the links that you have provided should help us a great deal with our ongoing trust research.

Our apologies for our late response to your wonderful message. The trust that we have been working on has taken a back seat to other more pressing problems and conundrums (installing a new septic system and water well on his farm) that we need to attend to for "Uncle John"..... Never a dull moment!

Warmest Regards,
T & M

 

[adjusterjack]

You're welcome. Hope things work out.