[WSBAPT] Testamentary Trust Issue

Tue Jul 23 10:41:34 PDT 2024

In response to question #2, fiduciaries are allowed to have conflicts of interest.  I am allowed to be the trustee of my mother's trust, even though my main duty is to divide the trust among myself and my seventeen siblings.  Attorneys, on the other hand, are not allowed to have conflicts of interest.  But one attorney can represent the one trustee who has conflicts of interest.
In response to question #3, if everyone affected by the matter consents in writing, you can proceed without a petition for instructions.  But if some beneficiaries are minors, who will sign for them?  Or if you file a petition for instructions, who will receive the notice to the minors?
I don't think you should add an UTMA account to this mix.  If it is an account held by a trust, then it is an account held by a trust.  It is not an UTMA.  On the other hand, if you want to use an UTMA account instead of a trust, then that could be something to consider, as long as the affected parties consent in writing.
Whoever drafted this thing did not do anyone any favors.
Phil Jones

Philip N. Jones |Duffy Kekel LLP
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of msafren at jennylinglaw.com
Sent: Monday, July 22, 2024 10:52 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Testamentary Trust Issue

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Hello fellow Listservers,

I have a circumstance involving a testamentary trust and I could use any guidance or suggestions that you all may collectively have.

The decedent left a will which bequeaths the entire estate via the residuary clause.  The residuary clause gives equal shares to the decedent's 5 surviving children and a right of representation to the children of a pre-deceased child.  The residuary clause contains a single sentence stating" If any beneficiary is under the age 21 then the distribution to said beneficiary under the age of 21 shall be held in trust."  The will later sets forth two potential trustees for the trust, without any guidance how to administer the trust, the process or provision of substitution of trustees, if any distributions may be made prior to the age of 21, and how the funds should be held or invested or managed.

It has come to light that the children of the pre-deceased child are under the age of 21.

Questions:

  1.  Given that the residuary clause directs any minor's share to be held in trust (presumably for that minor's benefit) is the appointment of a Probate Guardian Ad Litem necessary?  I would think not because any minor would not be a beneficiary and their share would be held in the directed testamentary trust, but I wanted to confirm and get others' opinions.

  1.  If the trustee for the testamentary trust for minor beneficiaries and the PR are the same person, does this necessarily create a conflict of interest for that person?  Again, I think not because a PR can also be an estate beneficiary and even a trustee of a beneficial trust without necessarily creating a conflict of interest.

  1.  Is a petition for instruction from the court on direction to create the residuary trust necessary or even advisable?  Or instead, it is simply up to the trustee of the residuary trust to draft the trust agreement so long as it complies with statutory law and the broad terms of the will?

  1.  What is a reasonable mechanism to hold the residuary trust assets for the minors if the amount of the funds that the trust will receive is less than $50,000. Would a UTMA account be appropriate?  Trying to help suggest to the trustee to find a balance between administrative costs and burdens and creating an account that would create and produce a return for the beneficiaries of the trust.

Thanks in advance

Kind regards,
Michael S. Safren, Esq.
Attorney at Law
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