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Author: Phil Craig Article source: http://www.about-estate-planning.info/. Used with author's permission.
Early in my legal career I represented two young women in their
early 20s.
Their mother had been killed in a car accident when they were
infants. An out of court settlement had been reached and a
lump sum of cash had been awarded to each of them.
Since they were "minors" (too young to have legal capacity to
act for themselves) the money was given to their father "in trust"
to be held until they reached the age of 18.
The reason they had been referred to me was because they had
both reached 18 and had asked their father for their money.
He had ignored their requests.
I was hired to get their money.
Easier said then done. Their father hired a lawyer of questionable
repute who threw up every roadblock in the book, hoping to make
us go away.
We eventually learned why. Their money was gone.
Their father had spent the girls' money… some on personal living
expenses, some on vacations. He even had given some of the money
to a friend for a business that had failed.
Their father was broke. There was no bond (insurance on a trustee's
actions) and no money.
I sent the case to the DA's office for criminal prosecution and
last I heard there was a plea bargain that included a requirement
that he work to earn the money to pay them back.
The moral of the story? Who CAN you trust?
When you set up any kind of trust, a living trust, an irrevocable
trust, a charitable trust, any kind of trust, how will you be sure
they will perform in an honest an ethical way?
One way is to require a bond. However, often you will see in the
pre-prepared "forms" or "kits' that the requirement for a bond
is removed.
Often, it is wise to appoint two or sometimes three trustees so
they can keep an eye on the others. But then the drawback is that
you have a trust that is managed by committee.
There is no easy answer. The answer depends on your particular
circumstances.
How much are you worth?
What type of assets do you own?
How complicated will management be?
Will there be management during your life?
What other obligations does the person you've named have
(are they raising a young family?).
Even with the case of the two young women, the father had an
obligation to give accountings to the court showing what he had
done with the money. He never did and there was no one around
to make him.
So, don't take the appointment of a trustee too lightly. Talk it
over with your family and your lawyer. And be sure to review your
document every few years. Family circumstances may have changed
where someone no longer has the time to step in if they are
needed.
Good luck and until next time,
Phil Craig
P.S. Feel free to forward this on to any friends. Phil Craig is a licensed attorney and entreprenuer.
He started practicing law at age 25 in 1979.
He does not take on any more clients, but is
advisor to some of the biggest names in the internet
world. He shares his knowledge gained over the
last 25 years at his Living Trust Secrets newsletter site:
click here=========>http://www.LivingTrustSecrets.com
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