When a couple creates a revocable trust with an A/B designation, when the first spouse passes away, the remaining spouse usually remains as trustee. While in most cases, this works out well, there are times when becoming the
When to avoid becoming a
trustee of two trusts?
Lets say you are a surviving wife in an A/B Trust situation, and your deceased husband left gifts of specific property to his children from his first marriage. Years go by, you complete the allocation, and then you decide that you want to sell one of the properties which were specifically designated as a specific gift. Because, now, you are a trustee, you must notify the beneficiaries of the B Trust that you propose or plan to sell that property.
When you want to benefit from the trust, but are the trustee, you should not act as a trustee. This may seem
But more importantly, you may have a conflict of interest, if you try to sell the property to
As a trustee, if you want to sell the property to yourself, you must insure that the sale is fair and reasonable to the beneficiaries. You cannot benefit from the transaction. This means, you as a trustee cannot personally benefit from it. This type of transaction is a slippery slope and are generally advised against. In addition, you must give notice of all important or material facts about the terms of the sale to the beneficiaries. For example, if the property has a foundation defect, and you which to be credited for it, you must disclose the defect to the beneficiaries, and to tell them how much, if any credit you seek.
If you are a trustee in Woodland Hills, or a trustee in Los Angeles and are contemplating selling a specific property, or have questions about your dual role as a trustee, feel free call us to consult with a resourceful trust attorney to help you meet the above fairness and disclosure requirements.
By: Mina Sirkin, Trust attorney in Woodland Hills, Los Angeles County, California who is a Board Certified Specialist expert in Estate Planning and Trust Law, whose expertise is to advise trustees about their roles under California trust law. Call 818.340.4479