Q: When exactly does a revocable living trust commence? Is it when the grantor passes or when the distribution is made?
My father passed in April 2013 and had a revocable living trust. I received my first distribution in March 2014. According to the terms of the trust regarding distribution, it specifically states: one half of the then fair market value of the trust assets upon the establishment of said trust, and the balance thereof, after the 5th anniversary date of the commencement of said trust. Would that be 5 yrs from the day of my father's passing, or 5 yrs from my first distribution? The trustee and I do not speak so I'm trying to figure this out on my own. Thank you for your time.
A:
The second distribution would be five years from the date of your father's death unless there was some language that required the 11-month delay for the first distribution. Normal trust language would create your sub-trust as of the date of your father's death and provide for the first distribution as soon as possible. It is normal for there to be delays with the initial distribution as the estate is settled and while the time period for creditors to present claims expires. There is most likely no reason for a delay at this point in the trust administration.
I would send the trustee a certified letter to ask for an accounting and an estimated date for your second distribution. Even if you are not speaking, you are entitled to know how the trust is being administered.
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A:
It would 'commence' when the first item of property was transferred into the trust.
The bottom line is that this is a pretty unusual wording and without seeing the WHOLE document, I'm not confident that my statement above is the 'final word' in interpreting the document. I'd strongly urge you to bring all the documents to a local estate planning / probate attorney to review and provide some real advice.
This situation SCREAMS why trusts designed to 'avoid probate' often backfire, because if this is not resolved, you're going to end up in probate court to get a judge's ruling on what should be done anyway. And it will be MORE expensive than probate would have been in the first place in most cases.
Seek local legal help ASAP.
-- This answer is offered for informational purposes only and does not constitute legal advice or create an attorney/client relationship.
I am licensed to practice in Michigan only. Please seek competent local legal help if you feel you need legal advice
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