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Hello,
My aunt who I'm very close to and is a savvy senior unfortunately has stage four cancer and is entering hospice. She's very much an organized advanced planner like me and has amended her trust and made me executor of her estate, trustee of her trust upon her passing, as well as named me as her power of attorney for financial situations and medical decisions is she can't act for herself.
She has lovely step daughter who is six years younger than me as an alternate for everything and her step son (nice guy, but I haven't seen him in ages) as the third alternate for everything who is seven years younger than me.
First let me say that I really appreciate how organized she's been in everything and I more than anything, of course, at this time am most concerned about her well being and comfort. I will say that the trust and her wishes are straight forward, not overly complicated except perhaps for the timelines for asset distribution to three people. Her son who is 57 will be getting distributions of financial assets in five increments, the last that isn't reached till 16 years after her death. Her grandson who is 22 will be getting financial assets in five distributions also, the last which is not until 20 years after her death. And her granddaughter who is a minor will also be getting incremental distributions of financial assets, the last which won't be till she is 42.
I'm 63 by the way and she is 83. If my aunt passes away next year let's say, I would be 80, 84, and 92 respectively before my trustee duties are complete for these three beneficiaries. You never know what life brings. We do have longevity in our family and it's very likely if I am as fortunate as older relations of mine that I will competent and capable for doing this at 80 and 84, but I think there is a big possibility that me and successor trustees might not up for doing this or be around - especially for doing distributions for her minor granddaughter. What recommendations do you have for me? Might I be able to get a bank with a trustee department named as a third alternate. I would prefer not to burden my aunt with this, at this point, but this long distribution cycle I think is an issue. Do you think I should recommend she contact her attorney again and have a bank with a good trust department listed as a third alternate now - that would probably be easier for her to do now vs. me getting some kind of amendment. But gosh she's going thru a lot know and it seems like a petty thing in the grand scheme of things. She wants to provide some financial help for this group, but thinks they would blow the money so wants to hold a lot of it back. There is no one in the generation after mine that she thinks has the financial savvy and that she trusts implicitly to name that she is close to.
Hi - I did some research into having a trust company or atty act as trustee for a trust and was shocked at what they are legally able to charge for fees. I think it was an hourly rate plus a percentage of the assets of the trust on a yearly basis. I am sure there are many reputable firms out there... but be very careful of what the management costs will be to the trust.
Also we have a relative (close family and friend) who is an atty who is named as a trustee for my brothers trust, and my brother made sure to include wording in the trust documents stating that his compensation would limited to standard actual costs as an individual and not an atty. He got to thinking that the atty-relative could get busy and hand things off to another atty in his firm or his para-legal and charge those fees accordingly.
Hi - I did some research into having a trust company or atty act as trustee for a trust and was shocked at what they are legally able to charge for fees.
I'm shocked that you are shocked. Did you think they would do it for free?
I think it would be great for you and your aunt to speak to her attorney—even by phone or Zoom—to get advice on how to handle this issue of lengthy distributions as I feel it’s very valid.
For starters, if it’s not addressed by all of you, you not only have the issue of arranging for distributions over a potentially 30 year period, you also have the responsibility of maintaining the trust over that 30 year period. That means filing trust tax returns and paying trust taxes, and also managing trust assets and paying expenses incurred by the trust. And I assume there are provisions for your time and effort and that you’ll be compensated by the trust.
You didn’t mention the size of this trust but if it’s only a few million it might not be worth stretching out distributions over such a lengthy period. Also, a trust department is going to charge more than what you would probably get paid, so again, depending on the assets, it might just be worth getting the distributions over with (with a provision of some type addressing the minor grandchild). Or making one of the younger successor trustees the primary trustee.
Finally, who does your aunt’s taxes? Does she realize that the tax brackets for trusts is significantly higher than for individuals? And finally, you have said your aunt is extremely organized, but you should still verify how her assets are titled, and check the beneficiary designation. If the trust is not the beneficiary, or if there is no transfer on death provision on the account, although your aunt has a trust, she has no assets in her trust.
I really doubt this is the case as you said she’s very organized, but there are many instances when people set up a trust, and never go the extra step to make sure their assets are moved into the trust. A lot of people think once a trust is set up, that poof!, it’s all taken care of, but there is still that additional step of retitling assets/updating the beneficiary. Generally, people will remember to put their house in their trust, but then don’t think to take care of the rest of their assets.
Good luck, and sending wishes of comfort to your aunt.
Hello,
My aunt who I'm very close to and is a savvy senior unfortunately has stage four cancer and is entering hospice. She's very much an organized advanced planner like me and has amended her trust and made me executor of her estate, trustee of her trust upon her passing, as well as named me as her power of attorney for financial situations and medical decisions is she can't act for herself.
She has lovely step daughter who is six years younger than me as an alternate for everything and her step son (nice guy, but I haven't seen him in ages) as the third alternate for everything who is seven years younger than me.
First let me say that I really appreciate how organized she's been in everything and I more than anything, of course, at this time am most concerned about her well being and comfort. I will say that the trust and her wishes are straight forward, not overly complicated except perhaps for the timelines for asset distribution to three people. Her son who is 57 will be getting distributions of financial assets in five increments, the last that isn't reached till 16 years after her death. Her grandson who is 22 will be getting financial assets in five distributions also, the last which is not until 20 years after her death. And her granddaughter who is a minor will also be getting incremental distributions of financial assets, the last which won't be till she is 42.
I'm 63 by the way and she is 83. If my aunt passes away next year let's say, I would be 80, 84, and 92 respectively before my trustee duties are complete for these three beneficiaries. You never know what life brings. We do have longevity in our family and it's very likely if I am as fortunate as older relations of mine that I will competent and capable for doing this at 80 and 84, but I think there is a big possibility that me and successor trustees might not up for doing this or be around - especially for doing distributions for her minor granddaughter. What recommendations do you have for me? Might I be able to get a bank with a trustee department named as a third alternate. I would prefer not to burden my aunt with this, at this point, but this long distribution cycle I think is an issue. Do you think I should recommend she contact her attorney again and have a bank with a good trust department listed as a third alternate now - that would probably be easier for her to do now vs. me getting some kind of amendment. But gosh she's going thru a lot know and it seems like a petty thing in the grand scheme of things. She wants to provide some financial help for this group, but thinks they would blow the money so wants to hold a lot of it back. There is no one in the generation after mine that she thinks has the financial savvy and that she trusts implicitly to name that she is close to.
My own estate is a lot simpler than this.
Regarding the bold above, sadly, I think you must talk to your aunt about this and come to her with a solution. There is a reason your aunt chose *you* as executor and trustee rather than one of her step children. It may well make sense for you to propose that you be executor and trustee until you reach a certain age & then you turn over executor and trustee powers to someone younger or even to a Trust Company. She may well say "no" and just leave everything as is.
You didn't mention it, but there is real work involved in administering a trust. Do her trusts have their own Tax IDs & tax returns? Are you personally savvy enough to file trust tax returns each year? They can be simple & straight forward or they can be quite complex.
Hi - I did some research into having a trust company or atty act as trustee for a trust and was shocked at what they are legally able to charge for fees. I think it was an hourly rate plus a percentage of the assets of the trust on a yearly basis. I am sure there are many reputable firms out there... but be very careful of what the management costs will be to the trust.
The answer is it all depends on what you select. We have also engaged a trust company as the secondary administrators of our estates. The company we selected charges an hourly fee only.
I agree with you, OP, that this is an issue. I would resign if I were you, if she's not willing to have immediate settlement and distribution. It's just too much to ask of someone, is the bottom line.
No. How did you get that from my post? I did not say they would do it for free. Why even post this response?
Well those taking the responsibility are taking legal and financial responsibility in their hands so you should expect it to be expensive especially if it is in their professional capacity to handle said role. If you get a rando family person to handle it for free? Great but they won’t understand the capacity or risk typically speaking. It should be a well paid role
Thanks so much for your responses and ideas. I appreciate it. I think I will talk to my aunt about the long distribution and jointly come up with a solution with her that both of us are comfortable with (her attorney can probably help with ideas for that too). I wonder if there could be a provision where as the primary trustee I could at some point in time when me and all the alternate trustees are older, name a successor trustee whether than be a younger relative, a bank trust department, whatever (and I would do my research to do what I thought was the best choice).
It's less than a year ago that she amended the trust and another small amendment would be pretty easy I'm thinking. Her attorney lives in her subdivision and even came over to her home last time to make things easy for her. I live a good five hour drive away from my aunt but talk to her regularly and will see her over the Thanksgiving holiday.
The estate is just a couple million (a substantial help to the beneficiaries no doubt and a lot of money to them), but not a massive estate. Her assets including her house are titled properly to be part of the trust and she has already provided me the the tax identification number for the trust (official papers on that). There are provisions for anything not in the trust (if there is anything). She has things in order. I know her attorney initially wanted her to do shorter distribution periods, but after talking to my aunt / listening to her concerns, agreed on the longer distribution periods for this. My aunt probably knows about the higher tax rate for trusts but thinks it's worthwhile in this case. I can lookup what those tax rates are though and mention that to her too.
My aunt is compensating me for my time to handle the estate over it's lifetime, and I'm sure that's part of her reasoning in picking me is that I am happy to do it, am interested in Personal Finance (enjoy this kind of stuff to some extent) and will do it competently for far less than an attorney or trust department, leaving more money for her son and grandchildren.
As for filing taxes for a trust: I'm comfortable filing taxes but use a great tax guy I have. I have a really good tax guy who is reasonable who has filed taxes for trusts for me before. But hey, for the period of time we're talking I'll probably need a younger tax person at some point too.
Again thank you for taking the time to post.
Last edited by Kathy884; 10-29-2023 at 10:50 AM..
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