Trust Successor Question

[Sundazes]

I did a search and came up empty. I am still on the fence about doing a trust. One question I have is can the successor be a resident of another state? I live in MD and the possible successor lives in PA. Any help would be appreciated.

 

[Arcamm]

I hope so. Our successor lives in PA. I'd bet as long as your trust items are legal in the state he/she lives in, you'd be OK.

 

[BigDaddy]

Subscribed,

I've not seen very much discussion of the portability of trusts. I asked one of the IP lawyers about establishing a trust if I was going to move out of state and he advised waiting. That's not your issue, but close. Some claim a trust can last for multiple generations.

If future successors live in more than one state, maybe it is a problem. I dunno. Hopefully someone whose qualifications are more than internet access will answer.

 

[fabsroman]

A trust that is validly created in the state that it is created in will survive in another state. Imagine if Wills were not valid once you moved to another state. Imagine is a trust is no longer valid once you move to another state. What happens if the trust is created in Maryland and all the beneficiaries live in different states? What happens if the trust I just created, where my wife and kids are the beneficiaries, is around 40+ years and my kids are all over the country when I pass on?

 

[md_al]

I'm not sure if the successor is required to be present and sign when the trust is notarized since the signatories are the Trustee/s and witnesses (bank employees). Maybe the Lawyer you spoke to could clarify that. But if you move to another state there is a template to change the address of the Trust.

Sent from my SM-N900P using Tapatalk

 

[fabsroman]

I'm not sure if the successor is required to be present and sign when the trust is notarized since the signatories are the Trustee/s and witnesses (bank employees). Maybe the Lawyer you spoke to could clarify that. But if you move to another state there is a template to change the address of the Trust.

Sent from my SM-N900P using Tapatalk

Successor what, trustee? The successor trustee is not required to sign the trust when it is established. A successor trustee is either specified by name within the trust document or there is a method within the trust document to appoint a successor trustee.

Beneficiaries are not required to sign the trust either.

The main issue with moving is changing the address with ATF for the NFA items that are in the trust. It is the same thing as if you moved and you personally owned the NFA items and not the trust. You would have to notify the ATF of the new address for the NFA items. If the trust held property other than NFA items, and no NFA items whatsoever, you would move and there would be no issue whatsoever with the trust. Actually, you can move to another state with the NFA Trust owning NFA items and there is still no issue with the trust, only with the ATF and NFA items.

 

[Sundazes]

Wouldn't the successor be a trustee and therefore have to sign and be notarized?

 

[fabsroman]

Wouldn't the successor be a trustee and therefore have to sign and be notarized?

When the trust Grantor signs the trust document, is there any place for the trustee to sign the document? What about in a Power of Attorney? Does the person receiving the power sign the document? Nope. What about with an Advanced Health Care Directive? Does the person receiving the power under a Directive sign the document? Nope.

What does your NFA Trust say about the appointment of successor trustees? There should be a process, and I doubt there is any form that the successor trustee needs to sign and have notarized. Usually, the current trustee will appoint a new trustee via writing and send the writing to the successor trustee. Then, the successor trustee needs to accept the trust/appointment in writing by sending something back to the current trustee. Unless the trust document itself calls for the acceptance to be notarized, it does not need to be notarized.

End of the day, you need to read through your trust and understand what it says. While you are still breathing, you yourself most likely have the power to amend the trust document and change the trustees. This will allow you to appoint co-trustees of the trust right now that will also be able to use the trust property (e.g., NFA items) without them having to be in your presence while using the items.

 

[outrider58]

My trust came with a separate page for each me and my two trustees to sign and have notorised, which we did.

 

[fabsroman]

My trust came with a separate page for each me and my two trustees to sign and have notorised, which we did.

Why did you and the co-trustees have to sign something that needed to be notarized? Did you attorney explain that to you? This actually has me intrigued.

What about Schedule A? Do you have to get that notarized too every time you change it to include another NFA item?

 

[Lex Armarum]

A trust that is validly created in the state that it is created in will survive in another state. Imagine if Wills were not valid once you moved to another state. Imagine is a trust is no longer valid once you move to another state. What happens if the trust is created in Maryland and all the beneficiaries live in different states? What happens if the trust I just created, where my wife and kids are the beneficiaries, is around 40+ years and my kids are all over the country when I pass on?

Well, there's a hitch in your giddy-up here partner. With traditional trusts that are designed to handle cash, real property, or equities (stocks/bonds), I will agree with you. When it comes to firearms, I cannot.

First, firearms are extremely portable property that straddles the line between real property and personal property. Each state has its own laws regarding firearms ownership and transfer. What may be legal in one state may not be legal in another state when it comes to firearms held in trust. Therefore, if a client has an NFA trust created in Maryland then moves to Illinois where NFA items are illegal, the client has a problem. I seriously doubt client will leave his NFA firearms in Maryland where the trust was created; moreover, an Illinois court may refuse to enforce the trust because, under Illinois law, it was created for an illegal purpose. This scenario is true across every state. Thus, an NFA trust might not be valid in all 50 states.

Second, trust law (both statutory and common) is different in every state. State's that have a Uniform Trust Act will likely agree on the validity of a trust so long as the statutory language is relatively close and the trust was created in accordance with the statute. State's that do not have Uniform Trust Act are outside of this consideration. When it comes to common law, figuring out each nuance in how State courts will address a trust if ever challenged in that State court can be tricky.

All of this boils down to the fact that NFA trusts and NFA firearms are easily portable between the states and the state law where the property is located governs the adjudication of the trust in court (much the same as it is for wills; side note: you'd be surprised at the number of "conflict of laws" cases that are generated from estate planning matters). Adjudication of the trust in any state will likely follow the rules associated with the locus of the property. Where the property remains in one location, then I can see a trust valid in all 50 states. However, if the property moves from state to state, adjudication/validity of the trust will reside with whichever state the property lands in at the time of adjudication.

I advise all of my clients that it is a good idea to have an attorney in their new state of residence review their trusts (as well as all of their other estate planning documents) to ensure that their trust does not run afoul of that state's law. For those that want to be critical of my advice, I also tell my client's that its unlikely that there is a problem but you never know; better to be safe than sorry when it comes to NFA firearms.

Too many estate planning attorneys/transactional attorneys fail to consider potential litigation issues when designing their documents for clients. As a former litigator, the foremost question in my mind when drafting anything these days is: What happens if this document ends up in court?

 

[Lex Armarum]

Why did you and the co-trustees have to sign something that needed to be notarized? Did you attorney explain that to you? This actually has me intrigued.

What about Schedule A? Do you have to get that notarized too every time you change it to include another NFA item?

I think this article presents a good reason for getting your trust doc notarized: http://public.getlegal.com/legal-info-center/what-is-a-notary-and-why-do-we-notarize-documents/.

That said, its not essential. However, I do it for all of the trusts I create for many of the reasons described above.

As for the Schedule A, I think that getting it notarized after every change might be a bit excessive because, the trustees should be the only people changing that doc. If their not and their not monitoring the trust assets, then they are derelict in their duty and could be liable for waste of trust assets.

 

[md_al]

Wouldn't the successor be a trustee and therefore have to sign and be notarized?

The Trust defines the Successor as the one who gets to assume control of the Trust once the Trustee is incapacitated or dead. If the successor is also named as a Co-Trustee then as Co-Trustee he/she has equal access to the Trust items including sale or adding items to the Trust. The successor can be a co-Trustee. While that seems redundant, I did put my wife as Co-Trustee and she had to sign the Trust. The Successor need not sign in the Trust document: Only the Trustee/s, Witnesses, and the Notary.

Rusty's link is very informative as to why to get things notarized. Back where I come from, only Lawyers can notarize documents. But that is another country and my Father in Law is my Lawyer.

On the other hand when I opened a Checking Account for the Trust with Wells Fargo, They did not put my wife as Co-Trustee but put her as Successor. Something about their setting up my account needed a Successor to the account, and the Successor could not be a Co-Trustee. She did not have to sign for the Bank account.

So in my Trust, my wife is both Co-Trustee and Successor. And in the Trust Checking account she is the Successor.

 

[fabsroman]

Well, there's a hitch in your giddy-up here partner. With traditional trusts that are designed to handle cash, real property, or equities (stocks/bonds), I will agree with you. When it comes to firearms, I cannot.

First, firearms are extremely portable property that straddles the line between real property and personal property. Each state has its own laws regarding firearms ownership and transfer. What may be legal in one state may not be legal in another state when it comes to firearms held in trust. Therefore, if a client has an NFA trust created in Maryland then moves to Illinois where NFA items are illegal, the client has a problem. I seriously doubt client will leave his NFA firearms in Maryland where the trust was created; moreover, an Illinois court may refuse to enforce the trust because, under Illinois law, it was created for an illegal purpose. This scenario is true across every state. Thus, an NFA trust might not be valid in all 50 states.

Second, trust law (both statutory and common) is different in every state. State's that have a Uniform Trust Act will likely agree on the validity of a trust so long as the statutory language is relatively close and the trust was created in accordance with the statute. State's that do not have Uniform Trust Act are outside of this consideration. When it comes to common law, figuring out each nuance in how State courts will address a trust if ever challenged in that State court can be tricky.

All of this boils down to the fact that NFA trusts and NFA firearms are easily portable between the states and the state law where the property is located governs the adjudication of the trust in court (much the same as it is for wills; side note: you'd be surprised at the number of "conflict of laws" cases that are generated from estate planning matters). Adjudication of the trust in any state will likely follow the rules associated with the locus of the property. Where the property remains in one location, then I can see a trust valid in all 50 states. However, if the property moves from state to state, adjudication/validity of the trust will reside with whichever state the property lands in at the time of adjudication.

I advise all of my clients that it is a good idea to have an attorney in their new state of residence review their trusts (as well as all of their other estate planning documents) to ensure that their trust does not run afoul of that state's law. For those that want to be critical of my advice, I also tell my client's that its unlikely that there is a problem but you never know; better to be safe than sorry when it comes to NFA firearms.

Too many estate planning attorneys/transactional attorneys fail to consider potential litigation issues when designing their documents for clients. As a former litigator, the foremost question in my mind when drafting anything these days is: What happens if this document ends up in court?

Your point about the NFA item being illegal in Illinois has nothing to do with the validity of the trust. The item would be illegal if it is owned by an individual or a trust. Just like it isn't legally for a trust to own crack cocaine. A trust cannot own illegal items, just like a person cannot own illegal items. So, it has nothing to do with the trust itself, but the legality of the property within the trust.

So, is it your position that a trust created in Maryland, pursuant to Maryland law, might cease to exist merely because the grantor of the trust moves to a different state? I don't think that is the case.

Alright, did some Google Foo. It isn't so much that the trust is no longer valid in the other state. It is all about how the ATF looks at it. The ATF looks to see if the trust is valid per the law in the state where the trust is currently being used. Pretty good summary here:

http://www.guntrustlawyer.com/2011/04/what-happens-with-my-gun-trus.html

I cannot imagine where a notarized signature and two witnesses would be required by any other state. However, there are indeed nuances between states as far as what is required for a trust to be valid.

Has the ATF's position/view ever been challenged in court? Kind of hard to believe that the ATF can take a position that a trust is not valid for NFA items that would be valid for any other legal property. So, an NFA trust could hold bonds, stocks, and other investments from state to state without any problem whatsoever, but a trust created in Maryland and recognized throughout the country by the other 49 states is not valid in the ATF's eyes unless it meets the standards required of the state where the grantor/trustee moves with the NFA items. The stupidity boggles my mind and if there is a case on this I would love to read through it and see how the court came down in favor of the ATF.

Look at the quick blurb here "A Living Trust should be valid in any state no matter where you signed it".

http://www.nolo.com/legal-encyclopedia/moving-new-state-take-look-your-estate-plan.html

I would think that the Full Faith and Credit Clause of the US Constitution would come into play here to require the other 49 states to recognize a trust as valid if it is validly created in Maryland when the grantor is a resident of Maryland, even though it would not meet the new state's formalities for a valid trust.

As far as firearms straddling the line between real property and personal property, come on. Firearms are personal property. They cannot even be close to being considered real estate. Is there some other type of property other than real and personal that I am unaware of? Even intangible personal property is still personal property.

As far as conflict of laws is concerned, we can leave that discussion for another day because it has absolutely nothing to do with whether a trust created in Maryland is valid in another state. Conflict of laws gets extremely involved and it isn't the same from one state to another, but I can only see that coming into play where there is some type of issue regarding interpretation of the trust, and not the validity of the trust. If the trust is signed in Maryland, a court in another state would have to apply Maryland law regarding the trust's validity when it was signed in Maryland.

 

[Lex Armarum]

Your point about the NFA item being illegal in Illinois has nothing to do with the validity of the trust. The item would be illegal if it is owned by an individual or a trust. Just like it isn't legally for a trust to own crack cocaine. A trust cannot own illegal items, just like a person cannot own illegal items. So, it has nothing to do with the trust itself, but the legality of the property within the trust.

So, is it your position that a trust created in Maryland, pursuant to Maryland law, might cease to exist merely because the grantor of the trust moves to a different state? I don't think that is the case.

Alright, did some Google Foo. It isn't so much that the trust is no longer valid in the other state. It is all about how the ATF looks at it. The ATF looks to see if the trust is valid per the law in the state where the trust is currently being used. Pretty good summary here:

http://www.guntrustlawyer.com/2011/04/what-happens-with-my-gun-trus.html

I cannot imagine where a notarized signature and two witnesses would be required by any other state. However, there are indeed nuances between states as far as what is required for a trust to be valid.

Has the ATF's position/view ever been challenged in court? Kind of hard to believe that the ATF can take a position that a trust is not valid for NFA items that would be valid for any other legal property. So, an NFA trust could hold bonds, stocks, and other investments from state to state without any problem whatsoever, but a trust created in Maryland and recognized throughout the country by the other 49 states is not valid in the ATF's eyes unless it meets the standards required of the state where the grantor/trustee moves with the NFA items. The stupidity boggles my mind and if there is a case on this I would love to read through it and see how the court came down in favor of the ATF.

Look at the quick blurb here "A Living Trust should be valid in any state no matter where you signed it".

http://www.nolo.com/legal-encyclopedia/moving-new-state-take-look-your-estate-plan.html

I would think that the Full Faith and Credit Clause of the US Constitution would come into play here to require the other 49 states to recognize a trust as valid if it is validly created in Maryland when the grantor is a resident of Maryland, even though it would not meet the new state's formalities for a valid trust.

As far as firearms straddling the line between real property and personal property, come on. Firearms are personal property. They cannot even be close to being considered real estate. Is there some other type of property other than real and personal that I am unaware of? Even intangible personal property is still personal property.

As far as conflict of laws is concerned, we can leave that discussion for another day because it has absolutely nothing to do with whether a trust created in Maryland is valid in another state. Conflict of laws gets extremely involved and it isn't the same from one state to another, but I can only see that coming into play where there is some type of issue regarding interpretation of the trust, and not the validity of the trust. If the trust is signed in Maryland, a court in another state would have to apply Maryland law regarding the trust's validity when it was signed in Maryland.

Just deleted everything... sending it to you in a PM. Why? Just don't feel like continuing the argument in the forum when I'm not really interested in seeing it through to the long, over-thought, messy end.

 

[teratos]

Steel cage death match....

 

[anderson76]

Just deleted everything... sending it to you in a PM. Why? Just don't feel like continuing the argument in the forum when I'm not really interested in seeing it through to the long, over-thought, messy end.

Perhaps you are more concerned with the idea that engaging in further debate on this topic will only serve to expose deficiencies in an area of law in which you purport to hold subject matter experience?

 

[outrider58]

Perhaps you are more concerned with the idea that engaging in further debate on this topic will only serve to expose deficiencies in an area of law in which you purport to hold subject matter experience?

I wouldn't assume that....and yes, Rusty did set up my trust.

 

[anderson76]

I wouldn't assume that....and yes, Rusty did set up my trust.

Rusty set up your trust. You have not been prosecuted for an NFA violation or other weapons crime. Therefore, Rusty must know what he talking about? Is that how it works?

 

[Straightshooter]

Perhaps you are more concerned with the idea that engaging in further debate on this topic will only serve to expose deficiencies in an area of law in which you purport to hold subject matter experience?

And , your expertise on the subject is????