| Author |
Message |
2rubes
Guest
|
 Posted:
Thu Oct 20, 2005 8:00 am Post subject:
Family trust question |
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Hi, I have been made trustee of my family's trust where the
beneficiaries are myself and 4 siblings. My folks set up
this trust because of a gift of their home 10 years ago to
us through some tax law that allows them to do so. The plan
was for them to gift this condo to us and then buy it back.
The money went into this trust bank account where I am the
trustee and I'm supposed to distribute the checks to all of
us. One of my siblings suddenly thinks he will be getting a
divorce. He has just been married for 2 year and he has
maintained a separate bank account and kept his condo from
being co-mingled, just in case of this event. But he is
worried about this money, even though the trust specicially
excludes all of our spouses. I am supposed to distrubte
this money on 11/2/05, but he would like me not to write him
a check. According to my folks, I can distrubte or not
distribute this money any way I like. And if my brother asks
me to keep the money in this account and hold it for a year,
I can do so. It is in a non-interest bearing account and I
was just told I can not convert it to a interest bearing
account (Washington Mutual) since it is a fiduciary trust
(Non-revocable). I would be able to invest it for him, I
buy fractionalized trust deeds between 9.5 and 12%. Then I
would have interest and taxes of course, and I assume they
could stay in the trust and have the trust pay the taxes on
the interest.
My main questions, am I allowed to distribute all of the
moneies except for his, and keep it for him. My other
siblings are all agreeable to this, and I would write a
statement that this money and interest earned would be his
at a future date. We all want to help him out, but no one
else wants to leave their money in this account.
Thank you.
Janet
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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<< Copyright (2005) - All rights reserved. >>
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Stuart A. Bronstein
Guest
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| Posted:
Thu Oct 20, 2005 9:07 pm Post subject:
Re: Family trust question |
|
|
"2rubes" <rubes@infostations.com> wrote:
| Quote: | Hi, I have been made trustee of my family's trust where the
beneficiaries are myself and 4 siblings.
One of my siblings suddenly thinks he will be getting a
divorce.
My main questions, am I allowed to distribute all of the
moneies except for his, and keep it for him.
|
Depends on what the trust says. Talk to the lawyer who
wrote it, or another lawyer who does trust work.
| Quote: | My other siblings are all agreeable to this, and I would write
a statement that this money and interest earned would be his
at a future date. We all want to help him out, but no one
else wants to leave their money in this account.
|
You should also talk to his divorce lawyer. His wife may or
may not have any interest in the funds in the trust. You
have to know that before you distribute anything to him.
Stu
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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| Back to top |
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Phil Marti
Guest
|
| Posted:
Thu Oct 20, 2005 9:07 pm Post subject:
Re: Family trust question |
|
|
"2rubes" <rubes@infostations.com> wrote:
| Quote: | My main questions, am I allowed to distribute all of the
moneies except for his, and keep it for him.
|
This has nothing to do with tax law. You need to ask a
lawyer.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>
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joetaxpayer
Guest
|
| Posted:
Thu Oct 20, 2005 9:26 pm Post subject:
Re: Family trust question |
|
|
2rubes wrote:
| Quote: | Hi, I have been made trustee of my family's trust where the
beneficiaries are myself and 4 siblings. My folks set up
this trust because of a gift of their home 10 years ago to
us through some tax law that allows them to do so. The plan
was for them to gift this condo to us and then buy it back.
The money went into this trust bank account where I am the
trustee and I'm supposed to distribute the checks to all of
us. One of my siblings suddenly thinks he will be getting a
divorce. He has just been married for 2 year and he has
maintained a separate bank account and kept his condo from
being co-mingled, just in case of this event. But he is
worried about this money, even though the trust specicially
excludes all of our spouses. I am supposed to distrubte
this money on 11/2/05, but he would like me not to write him
a check. According to my folks, I can distrubte or not
distribute this money any way I like. And if my brother asks
me to keep the money in this account and hold it for a year,
I can do so. It is in a non-interest bearing account and I
was just told I can not convert it to a interest bearing
account (Washington Mutual) since it is a fiduciary trust
(Non-revocable). I would be able to invest it for him, I
buy fractionalized trust deeds between 9.5 and 12%. Then I
would have interest and taxes of course, and I assume they
could stay in the trust and have the trust pay the taxes on
the interest.
My main questions, am I allowed to distribute all of the
moneies except for his, and keep it for him. My other
siblings are all agreeable to this, and I would write a
statement that this money and interest earned would be his
at a future date. We all want to help him out, but no one
else wants to leave their money in this account.
|
The trust documents will answer your question better than
someone unfamiliar with those documents. Does it state you
'shall' distribute the money, or that you 'may' distribute.
My child's trust states the percentage thay may be requested
each year. If child has spouse issues, child doesn't request
a dime till divorce is over. That was my attempt at
protection for this situation.
Why in the world is a sum of money sitting in a non-interest
account? Most brokers can handle a trust, and you can leave
it in a money market fund if you want no market risk.
Lastly, "fractionalized trust deeds"??? Common sense tells
me that with 10 yr treasuries at about 4.5%, anything paying
twice that is risky, why/how did that become the choice
after a non-interest account? how about a 4% CD?
Typically, you can distribute the earnings from the trust so
each benificiary pays tax on the interest, at their own tax
rate. The rate a trust will pay is almost always higher.
JOE
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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