Trusts & Estates Law/what to do first


My daughter and her boyfriend recently broke up.  He is the beneficiary of two 401 K's, her pension, and her life insurance.  She has an 18 year old daughter who her boyfriend said he will make sure she receives all the funds if my daughter should happen to die before he does. I do not know if she has a will.  What is the first thing she should do?  Change the beneficiary to her daughter and then set up a trust, or set up a trust first and then change the beneficiary.  She doesn't want her daughter to have all funds dispersed to her at once.  Is it a good idea to have my husband and I as her trust manager if we are in our late 60's?  Just want to know the first step as what to do.  thank you for your time and expertise.

Thanks for your question.  I would recommend that your daughter immediately change the beneficiary to her daughter ... and then proceed to set up a "retirement funds trust" and again change the beneficiary (to the trust).  There is virtually no way for her - or her daughter - to enforce an agreement with her ex-boyfriend to ensure he gives the funds to your granddaughter.  And if your daughter were hit by a bus or a truck before she has the trust set up, her daughter could be left with nothing.

If she does set up a trust, she will need to make sure that the trust has special provisions in it related to retirement funds; otherwise, it will need to be disbursed within 5 years.  Although I called it a "retirement funds trust", it can certainly hold life insurance proceeds, too, if it's designed for that.

As for her pension, if it's a "true" pension, usually only the employee and his/her spouse (and sometimes minor children) can receive it if the employee dies.  Your daughter needs to check that with her employer.  Some 401(k)s also have restrictions, so she needs to check that out, too.

Regarding who should be the trustee, I find that many of my clients don't want the responsibility after they're in the mid-to-late 70's.  Doing a little "rough math", it seems to me that your granddaughter will be about 28 by then.  So if you think you and your husband are going to be willing to manage someone else's money for the next 10 years, I don't see age as a problem.  

The biggest factor in choosing a trustee, in my opinion, is "trust" - that is, can you trust that the person you're putting in charge won't steal the money, won't spend it on frivolous items, won't make poor investment choices, won't keep the beneficiary in the dark about what's going on, will understand the responsibility and pay for any necessary advice (out of the trust funds), etc.  In other words, is the person honest AND a good financial manager.  Or at least is the person honest and smart enough to know what s/he doesn't know and get the help s/he needs to make sure s/he does a good job managing the money.

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Janet Brewer


BE CAREFUL about taking legal advice from non-lawyers.

I am a licensed attorney in California. I am available to answer questions about probating estates, preparing wills and trusts, administering estates and trusts, forming family limited partnerships and limited liability companies, and establishing a wide variety of estate and gift tax-sensitive trusts (charitable trusts, children's trusts, irrevocable life insurance trusts, etc.).

I can also answer questions regarding the preparation of estate tax returns (Form 706) in taxable estates. Please note that I do not prepare trust income tax returns and cannot provide you with any information about that type of return.

Please note: I am only able to practice law in the State of California. I cannot answer specific questions about other states' laws; I can only provide some "general" information that may or may not apply to your situation.


I have practiced California estate, gift-planning, and probate law exclusively since 1991. I am certified as a specialist in estate planning and probate law by the California State Bar Board of Legal Specialization (there are less than 125 such specialists practicing in Santa Clara County and fewer than 7,000 practicing in California - out of over 170,000 lawyers statewide).

I have served as an Instructor in the CFP (certificate in financial planning) program at University of California Santa Cruz, teaching the estate planning segment.

Silicon Valley Bar Association
Wealth Counsel
Wealth Advisors' Forum
Executive Committee Member, Solo and Small Firm Section of the California State Bar (appointed to a 3 year term by the California State Bar Board of Governors)

I received my law degree (J.D.) from University of Denver Law School in 1975. I was admitted to the Colorado Bar in 1975 and to the California Bar in 1977 (NOTE: although I am a member of the Colorado Bar, I am on INACTIVE status there). I earned an M.B.A. in 1982, and I earned a Masters Degree in Taxation Law (LLM) at Golden Gate University Law School in 2010 (with honors).

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Awards and Honors
2007, 2008, 2009, 2010, 2011, & 2012 - chosen as a "SuperLawyer" - one of the top 5% of Northern California lawyers practicing in the estate planning and probate area ( Avvo Rating of 10.0/10.0

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