Trusts & Estates Law/dissolving a trust


My brother passed in 2011 in Oregon.  He named me personal representitive and later to be trustee.  When the will was settled i agreed to step aside as trustee just to get it settled.  The trust was recently split and i have been put in charged of the half for my grown nephew.  He needs money to purchase a house and some for lawyer fees.  This will leave almost nothing.  The trust is suppose to go until his son is 25, he is 12 now.  Can i just give the grown nephew the money, closing his part of the trust.

To be clear:

You can do whatever you want. BUT. . .

You are responsible to the trust, and ultimately the beneficiaries, if you do anything that the trust did not specifically authorize.

I'm going to guess the trust was not very clear and complete about what can and cannot be done. Almost never, can someone setting up a trust, foresee the future issues and provide the necessary direction in the trust document. You are not alone in being stuck with difficult decisions and no directions to hold to. Most often trusts create a whole host of problems that far exceed any solution they promise to offer.

The trust document is the penultimate standard that will measure your actions. and just below that is "reasonable care" and a singular goal of providing for the beneficiary.

As the trustee you have a fiduciary obligation. Which brings in personal liability for your actions. That means if you fail to act in the best interests of the beneficiary and act according to the defined parameters of the trust document you can be financially responsible to the beneficiaries.

I haven't read the trust document. But it holds all the answers, as lame as those answers might be, those are the only actual answers you have to work with. You need to make sure that you are confident that your reading and interpretation of the trust document is reasonable, complete, and what any Judge would interpret if they read the same thing. Err on the side of caution here.

As trustee, it is not your money that you are managing, your passion, or compassion, is not at question, no matter what someone may attempt to guilt you into.

You were given the task of managing your brothers assets as he wanted them to be handled at the time that he executed the trust. If he was aware of today's circumstances he might have expressed a different set of rules int he trust, but he didn't. The rules are the rules. UNLESS, the Trust "Expressly" (meaning written) grants you authority to act according to your own passions or compassion, or "the dictates of your own conscience". That could be stated in many ways.

These are some critical questions that you should answer.

Who is the Beneficiary?  If there is more than one, is one named as "subsequent" beneficiary? The primary beneficiary is your "primary" obligation. Is there firm language that demands some value for your Great Nephew?

What are the limits that the trust states as to what can be paid for?

Does the trust use words like "For the health, welfare, and lifestyle" of the beneficiary?

If you were going to reduce the wording of the trust down to its simplest, most important statement, was it:

To last until the son turns 25 and then given to the father?
For the benefit of the son when he turns 25?
Just to be paid out when requested, and if anything is left then the son gets it when he is 25?

Again, I only know what you wrote in your question, and I am reaching here to give you a better more correct, even if, less popular answer.

Your Brother chose to give you the responsibility for those funds, not your nephew. Do you know the reason?

If your interpretation of the Trust doesn't allow you to give all to your nephew, even though his desires and needs are honorable, you need to keep the discussion framed that it is not your choice, and his dad, may not have anticipated this specific circumstance when we was creating this trust (again it is rarer than hens teeth, that anyone does) but you are obligated to fulfill the express requirements of the trust, not your own desires, no matter how much you desire, personally that he have the things he wants.

Sorry the answer isn't easy. And most likely it will be a very uncomfortable answer. But trusts do that. Make things very complicated.

I hope this give you a start on figuring out which direction you can go.

If you can find a solid interpretation that allows you to disgorge the assets of the trust, and close it down -- one that you could stand an deliver if you were dragged into court by your Grand Nephew, then, your idea is a valid option, and you can put all this mental anguish to bed.

Rick Fritzler


Trusts & Estates Law

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Richard Fritzler


Comparing the advantages and requirements of traditional estate practices, and unconventional methods? Are Trusts a viable asset protection vehicle? Is there an alternative to buying life insurance to reduce the impact of the estate tax. Is the elimination of the estate tax during the next decade good for everyone? I can review the benefits and misinformation that exists.


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