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Jewish World Review April 8, 2004 /17 Nissan, 5764

Jan L. Warner & Jan Collins

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Sister's early death sparks family estate war


http://www.NewsAndOpinion.com | Q: After my mother's death, my father had a bad experience settling her estate since she didn't have a will. While he had access to their joint bank accounts, only half of Mom's interest in their home and some farmland went to Dad; the other half was equally divided among my sister, brother and I.

My sister and I signed away our shares to Dad, but my brother, who has always had financial problems, made Dad buy him out. Dad was livid, and retained a lawyer to help him put everything in a living trust — even bank accounts, his car, truck and farm equipment — to make sure my brother was cut out. Because he got burned when Mom died, Dad refused to sign a power of attorney for fear he would be taken advantage of.

Dad's appointed himself as trustee of his trust, and me as his substitute. The trust says that Dad would get all of the income while he was alive. At his death, the assets were to be split between my sister and I. My brother was not mentioned because Dad never talked to him again after he wrote that last check. Dad had a stroke last November and was unable to make any additional decisions. My sister died in January, a month before Dad passed away, and she left two sons.

Instead of passing property quietly as he had wanted, there is now a big lawsuit. My brother has sued, saying that since my sister died before Dad, her share in the trust died with her and that her children get nothing. He says that he gets half of her share and I get the other half. My sister's children are suing to get what their mother would have received. We are all paying money out of our pockets to try to get this straight. The total value of all property in the trust is $300,000. How did this happen and do you have any idea what the result might be?

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A: Although we have not seen the trust itself, it appears that the problems center around 1) the language used in the trust; 2) whether your state's "anti-lapse" law applies to the trust; and 3) when your sister's rights under the trust vested.

If the trust language stated that if you or your sister died before your father, your respective survivors would get everything, neither your brother nor your nephews would have had any beef. We assume the trust contained no such language.

This means we ask more complicated questions: When was your sister's interest vested?

Does the anti-lapse law in your state apply to trusts. All state legislatures have enacted what are called "anti-lapse" statutes to prevent lineal descendents (children, etc.) of certain classes of beneficiaries from being cut out of a will if the primary beneficiary dies before the inheritance is effective. Your sister, as a child, would be one of those protected class of beneficiaries.

While the anti-lapse laws apply to wills, in a few states they also apply to trusts. And even if not specifically applicable to trusts, there have been arguments made that, depending on the language of the trust, they may apply anyway.

Here, your brother argues that the anti-lapse statute in your state doesn't apply to your father's revocable living trust because your sister's rights could not vest until your father died and, with no contingency language written into the trust, her rights are void. Your nephews argue that the anti-lapse law does apply, and that their mother's right vested when the trust was created.

The answer to your questions will depend on what the courts in your state decide by applying the language of the trust to the law of your state. There is no way to rationally predict the outcome. These very complicated questions point out the fact that using a living trust does not always mean avoiding probate or smooth sailing, as was your father's intention. Your question also points up yet another reason why documents should be prepared to meet the specific needs and desires of the client. Boilerplate trusts and other documents sometimes don't pass legal muster when, as here, there is an unexpected bump in the road.

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JAN L. WARNER received his A.B. and J.D. degrees from the University of South Carolina and earned a Master of Legal Letters (L.L.M.) in Taxation from the Emory University School of Law in Atlanta, Georgia. He is a frequent lecturer at legal education and public information programs throughout the United States. His articles have been published in national and state legal publications. Jan Collins began co-authoring Flying SoloŽ in 1989. She has more than 27 years of experience as a journalist, writer, and editor. To comment or ask a question, please click here.

Up



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powers of attorney or a living trust to manage our assets

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Can we stop our brother from swindling us?
What Gifting Will Disqualify You From Medicaid
The 'magic' language for a power of attorney agreement
Is care insurance a healthy choice?
Is there protection against Medicaid costs?
Long-term care insurance comes up short
HIPAA -- too much privacy?; nursing home doc could care less
Private pay nursing home residents pay more
Separated families should use care managers
What Makes Up a Caregiving Team?
Who is the client, parents or children?:

© 2003, Jan Warner