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Is it safe to add my name as a co-owner of my mothers Family Trust since my fathers passing?

Reno, NV |

I have poor credit and been facing a foreclosure, although not imminent. I am currently listed as beneficiary with my wife and 3 adult kids in succession. The value of trust, including her home is approx.. $600,000. Would it be safe from any creditors with my name added, or be better left alone? ~Dave

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Attorney answers 4

Posted

Your question does not make sense. You do not "add your name as co-owner" of a trust. You can be the grantor of the trust, (which you are not, since this was your parents), the trustee, (which presumably is your mother), or the beneficiary. It sounds like you are beneficiary, or at least a contingent beneficiary, upon your mother's death. If you are asking if your being added as co-trustee, (or even sole trustee), would jeopardize the assets, then the answer is no. Your mother would still be the primary beneficiary, in all likelihood. Because you are talking about your mother's estate plan, however, she should be discussing these matters with her attorney.

James Frederick

***Please be sure to mark if you find the answer "helpful" or a "best" answer. Thank you! I hope this helps. ***************************************** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state. I hope you our answer helpful!

Asker

Posted

I'm sorry my terminology is not correct. You've got the right idea of what I'm trying to say though. My mother is always changing things around in the bank since my father passed (multiple accounts, CDs etc.).. Since she wants to remove his name and add mine as a trustee leaving my wife and kids as beneficiaries, would that be a mistake? thanks for your answer. ~Dave

James P. Frederick

James P. Frederick

Posted

Dave~ Adding you as trustee is not the same as adding you as owner. As Trustee, you are not personally responsible for the debts of the trust. As the owner, you could be. As Mr. Cahill indicated, this is really an area where legal consultation is required, in order to make sure that your mother handles things properly.

Posted

I agree with Mr. Frederick. There's no way to add your name as co-owner of the trust, nor do I see what the incentive would be to co-own anything of your mother's. Due to the foreclosure, you potentially face the risk of a deficiency judgment entered against you. A creditor could attach any assets you own to satisfy the judgment, including those you co-own with your mother. Perhaps you can provide some more clarity to your circumstance, but as it stands now, it's a fruitless venture.

Richard Edmund Hawkins

Richard Edmund Hawkins

Posted

Even more than that, when your mother passes, your interest will be on the hook for your creditors, if any. If your have large and/or judgment creditors, the trust needs appropriate spendthrift language.

Frederick D Williams

Frederick D Williams

Posted

If the trust vests your mother with a power - as trustee - of appointment, you could be added as a co-trustee of your mother's trust. I am not certain why that would be to your advantage, but if you wish only to assist her in managing her (and the trust's) assets, there are vehicles for accomplishing that without such a dramatic step.

Posted

I also agree with the other attorneys, I'm not sure what you mean by become a "co-owner" of the Trust. You need to make the distinction between whether you have a current interest in the money, or whether you are a beneficiary. If you are a beneficiary, you typically would not have a right to the money until your mother passes (or some other event depending on what the Trust says). If you are a beneficiary, creditors cannot take the asset right now because you have no current right to the asset. If you become an "owner", and have a current ownership interest or ability to access the funds for your personal use, creditors can potentially take that interest.

Posted

I am guessing that your intent here is to add you as a person legally entitled to help in the management of the assets of your mother's trust. For that you would, indeed, need to be a co-trustee. You can, however, acquire many of the same privileges of helping your mother to manage the assets via a durable power of attorney. Perhaps one was included with your parents' trust package, but it probably grants authority to manage assets only upon a finding of mental incapacity. That is called a "springing" power, when what you would need in this instance is an "immediate" power of attorney. This would not expose your mother's assets (in her name or that of her trust) to your creditors, as the assets would not change name until her passing . . . then, pursuant to the terms of the trust, they would be re-titled in your name.
I agree with my colleagues here that some proper additional planning may more effectively shelter those assets - both for the remainder of Mom's life and even after they become yours. You may, in the company of and with the cooperation of your mother, wish to consult legal counsel for further information.

Mr. Williams is licensed to practice law in the state of Nevada. The foregoing response does not constitute legal advice and does not create an attorney/client relationship. The response is, essentially, educational only, and is intended to provide general legal information about the matters presented by the question. Often, the question does not include significant and important facts, dates and other information that, if known, could significantly affect the appropriateness of the response and make it unsuitable. Mr. Williams strongly advises consulting directly with an attorney licensed in your state in order to ensure proper advice and counsel is received.

James P. Frederick

James P. Frederick

Posted

This is true, but the agent under the POA would not have access to the trust assets. If the assets are all in the trust, then asker would need to be at least a successor trustee to have access.

Frederick D Williams

Frederick D Williams

Posted

Mr. Frederick, I must admit I am not familiar with Michigan law, but in Nevada, the successor trustee has zero authority until the grantor/trustee has died. It would grant the asker no rights or authority to make him the successor trustee - until his mother passes and his duties begin. Unless specifically restricted in the trust language, the trustee certainly has authority to execute a power of attorney to her son to enable him to assist her in managing the assets of the trust. Perhaps there is something one of us is not understanding about the fact pattern, but it certainly seems like the most efficient and economical approach to accomplish what the questioner and his mother apparently wish to do.

James P. Frederick

James P. Frederick

Posted

I do not know of any state law that allows an agent under a POA to access the assets of a Trust. The trustee (or successor trustee, or co-trustee), is the only person(s) who can do so. If the assets are owned outside of the trust and held by the mother alone, then a POA would allow access to them. Assets within the trust would need to be handled by the trustee. A successor trustee can take over upon death, incapacity or resignation of the prior trustee. The facts in the case are very slim, however, and it appears that Asker's primary concern is to shelter trust assets from mother's creditors or potential creditors. This should not even be attempted without consulting an attorney, as there are too many potential issues involved. A small sampling would include fraudulent conveyances, Medicaid qualification, as well as Asker's apparent credit and creditor access.

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