who is in control with 3 executors in a living trust in California? What % does each executor get paid from the living trust? ...

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who is in control with 3 executors in a living trust in California? What % does each executor get paid from the living trust?

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DakotaLegal's picture

 

 
What The Trust Says…
 
Naturally, you’ll need to focus, first, on exactly what the trust in your case says. It’s not necessary that a trust make things “equal.” Here’s another California case, which used some of the “magic words” of how trustees did share equally under the trust: compare this with the Trust you have an interest in, noting the underlined phrases or words.
 
The agreement further provided that the entire income was to
be payable to Dr. Maxwell during her life, and upon her death,
the trust estate was to be divided into four equal and separate trusts,
 the Helen Elizabeth Brown, Marion Maxwell, Jane Cummings,
and Betty Bertrand trust, respectively. Each person named was to
receive the life income of the trust bearing her name. http://law.justia.com/cases/california/calapp2d/251/98.html
 
Do You Have Trustees, Or Executors, OR Both…
 
Along those lines of defining what a trust says, there are some basics about how a “Living Trust” is unique, compared to wills or intestacy.
 
So, for example, you described “executors” instead of trustees. If the person who set up the trust has passed away, you may be dealing with both executors and trustees. Sometimes, the executor is the same as the trustee.
 
It is common to have a will along with a trust (called a “pour over will”). This means there will be an Executor is the person named in a Will and appointed by the court to be in charge of probating a Will, and then settling the estate, all under the court’s supervision. In California, this means an order is signed by a probate court, after a petition for probate has been filed with the court. An Executor has to agree to serve (not just being named by the will). A court will issue “letters testamentary,” which then allows access to bank accounts and distributing the estate’s assets under the Will.
 
A Trustee, on the other hand, is the person (or in this case, four people) who are eventually in charge of the assets listed in some sort of a trust. If the trust is a living trust, probate is avoided for the assets held in the trust. The goal is to allow Trustees more powers and to avoid expensive, delaying court supervision. In your case, the Trustees can perform many of the same duties that an Executor would, including agreement about what is fair for distribution: again, however, based first on what the trusts says.
 


  • How are trustees paid?

 
A trustee has special rules to follow in California, to protect the assets of the trust: which includes the way trustees get money out of the “body” of the trust. http://codes.lp.findlaw.com/cacode/PROB/1/d9/4/1/2.5. Since your trust has more than two trustees, each trustee is legally required to actually have something to say in the management of the trust. The goal is to guarantee that each trustee meets the duty of “trust.”
 
Still, avoid getting too focused on “income” and sacrificing long-term benefits that may be worth more. Here’s a guide to what income is usually available, and the impact on your taxes. http://www.calteclaw.com/files/USCArticle.pdf.
 

  • Can a Living Trust be changed?

 
Sometimes. If there is a problem with the trust, since as a failure to properly allocate the shares between the existing Trustees, it’s possible that it can be modified, or in some even more unusual cases even fail. This is not intended to be common since a Living Trust is supposed to be “irrevocable” after the trust fully funds (after the original Trustor dies).
 

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DakotaLegal's picture

 

 
What The Trust Says…
 
Naturally, you’ll need to focus, first, on exactly what the trust in your case says. It’s not necessary that a trust make things “equal.” Here’s another California case, which used some of the “magic words” of how trustees did share equally under the trust: compare this with the Trust you have an interest in, noting the underlined phrases or words.
 
The agreement further provided that the entire income was to
be payable to Dr. Maxwell during her life, and upon her death,
the trust estate was to be divided into four equal and separate trusts,
 the Helen Elizabeth Brown, Marion Maxwell, Jane Cummings,
and Betty Bertrand trust, respectively. Each person named was to
receive the life income of the trust bearing her name. http://law.justia.com/cases/california/calapp2d/251/98.html
 
Do You Have Trustees, Or Executors, OR Both…
 
Along those lines of defining what a trust says, there are some basics about how a “Living Trust” is unique, compared to wills or intestacy.
 
So, for example, you described “executors” instead of trustees. If the person who set up the trust has passed away, you may be dealing with both executors and trustees. Sometimes, the executor is the same as the trustee.
 
It is common to have a will along with a trust (called a “pour over will”). This means there will be an Executor is the person named in a Will and appointed by the court to be in charge of probating a Will, and then settling the estate, all under the court’s supervision. In California, this means an order is signed by a probate court, after a petition for probate has been filed with the court. An Executor has to agree to serve (not just being named by the will). A court will issue “letters testamentary,” which then allows access to bank accounts and distributing the estate’s assets under the Will.
 
A Trustee, on the other hand, is the person (or in this case, four people) who are eventually in charge of the assets listed in some sort of a trust. If the trust is a living trust, probate is avoided for the assets held in the trust. The goal is to allow Trustees more powers and to avoid expensive, delaying court supervision. In your case, the Trustees can perform many of the same duties that an Executor would, including agreement about what is fair for distribution: again, however, based first on what the trusts says.
 


  • How are trustees paid?

 
A trustee has special rules to follow in California, to protect the assets of the trust: which includes the way trustees get money out of the “body” of the trust. http://codes.lp.findlaw.com/cacode/PROB/1/d9/4/1/2.5. Since your trust has more than two trustees, each trustee is legally required to actually have something to say in the management of the trust. The goal is to guarantee that each trustee meets the duty of “trust.”
 
Still, avoid getting too focused on “income” and sacrificing long-term benefits that may be worth more. Here’s a guide to what income is usually available, and the impact on your taxes. http://www.calteclaw.com/files/USCArticle.pdf.
 

  • Can a Living Trust be changed?

 
Sometimes. If there is a problem with the trust, since as a failure to properly allocate the shares between the existing Trustees, it’s possible that it can be modified, or in some even more unusual cases even fail. This is not intended to be common since a Living Trust is supposed to be “irrevocable” after the trust fully funds (after the original Trustor dies).