Breaking a Trust | Are There Options?
BREAKING A TRUST…ARE THERE OPTIONS?
Written by Jeff Manley
Everyone was devastated when your dad died, especially your mom. That is, until “Fabio” swept her off her feet. Your dad left your 75-year-old mom in great financial shape through a trust he set up in his will. He wanted her to have all of the income from the entire principal of his estate, along with distributions of principal at the discretion of her trustee, your parents’ longtime attorney and best friend.
Because of her grief, no one could have guessed that your normally sensible mother would have become besotted with her 45-year-old tennis instructor. And you were equally shocked when he whisked her off to Italy and convinced her to draw on her financial distributions to buy all sorts of foreign properties, “investments” and a collection of custom Brioni suits that rival any worn by the Italian elite. Naturally, you are suspicious of this Casanova and your mom’s unusual behavior. There is no question in your mind that the terms of the trust should be broken so you can gain control of your mother’s reckless spending on the charming Fabio. But, you wonder, can anything be done to stop her?
Here is another scenario:
Your very generous parents provided for all of their grandchildren before they passed away. Each grandchild will get a $50,000 distribution from his or her trust at 25 years of age, and again at 30, and one last time at 35. Trusts for grandchildren are typically set up in this way to take care of certain life events, such as higher education, marriage, and the purchase of a first home. However, one of your daughters has a serious drug problem. As she is approaching her 25th birthday, you know that any money she receives will go toward funding her very expensive habit. As concerned parents, you want to intervene to change the terms of the trust to delay granting her this first distribution until she gets clean. But how?
Answers to these and other trust-related questions will be addressed in Part II of this blog to be posted on September 2, 2015.