IRREVOCABLE TRUST CAN PREVENT
STEP-MOM FROM DISINHERITING KIDS
Use of Irrevocable Trusts to prevent disinheritance
of children of prior marriages.
Paper Mill Operation
Dear Mr. Miller: I hope you can help my brother and me. Our Dad died last month and I think all of his estate is going to end up with his wife’s children. Several years ago Dad married a lady who had two children of her own. Those children are about our age, in their 40’s. Dad had a lot of property and cash, I’d say he was worth about $550,000. When he died last month, he was still worth about that amount. But his wife, who we have never gotten along with, told us we would get nothing now and she would change the trust so that we would get nothing when she died. She’s going to leave it all to her kids and disinherit us! What happened is that two years ago Dad decided to have a Living Trust made out. He chose a very inexpensive attorney to do it. In fact, he never really saw the attorney. Instead a representative came to his house. This guy was really a salesman. He took some information from Dad as well as a check for $650. The following week Dad received a mail packet with all the documents in the envelope and instructions on how to have everything signed. He went ahead and followed the directions to the “T.” As I look over my copy of Dad’s trust, at the top of page one a box is checked stating “Joint Trust, Revocable for both Spouses lives.” Does this mean his wife can do whatever she wants with the assets and we get nothing? Dad said we were supposed to get everything when his wife died. I thought that all Living Trusts were irrevocable after one spouse dies.–Child With Disappearing Inheritance
Dear Disappearing: I constantly stress that there are 1000’s of different types of Living Trusts but still, many people don’t seem to want to believe this. Joint husband and wife Living Trusts can be revocable (able to be changed) or irrevocable (not capable of being changed) after the first death.
Very few Trusts that I have seen have check boxes on page one to describe the type of trust. But remember, whatever is indicated on page one may be different from the actual language inside the document. So I would suggest that you have an attorney review the actual document and not just assume what it says.
Paper Mill Operation: From your description of what took place, your Dad signed on with what we call a “paper mill” operation. Whether an attorney was actually involved in the drafting or review of the document is anyone’s guess. But when the entire interview is done by a salesman/representative this should be the first clue that things are not right.
The salesman probably assisted your Dad in selecting the type of trust that would be prepared. But salesman usually have limited knowledge with which to advise. So your Dad apparently selected a trust which was revocable after the first death rather than one that became irrevocable at that point.
Irrevocable Alternative: Usually an attorney asks all sorts of questions about your family and whether there are children from prior marriages in addition to finding out about the type of assets you own and your net worth. In your Dad’s case, he probably would have recommended a trust which would become irrevocable upon his death. At that time, his wife would have received the income from it for her life and maybe have had the ability to dip into the principal if she needed it. Upon her death, what was left would have been directed to be distributed to you and your brother.
The proper person to be advising on Trusts is an attorney skilled in this field. He may be more expensive than the alternative, but he’s dealing with your lifetime savings–something near and dear to most people’s hearts.
Please keep in mind that no two sets of circumstances are identical and that the answer to any legal problem may change drastically based on even a slight change in the circumstances.