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Posted by Blake Krass on November 7, 2006, 8:19 am
Please log in for more thread options Stuart A. Bronstein wrote:
>> My wife is executrix of an estate and we're down to the last
>> steps. She wants to take the money that's left (~$45K) and
>> create 529 accts for the two beneficiaries, both pre-teen
>> grandchildren. Can the estate own those accts or does she
>> need to set up trusts for them with her as the trustee? If
>> trusts, which type of trust and is it one trust for both
>> accts or a different trust for each? She has a tax ID# for
>> the estate but has not established any trusts nor opened the
>> 529 accts yet. She'd like to minimize her future time and
>> paperwork and make sure these kids get the most benefit for
>> the least trouble.
> By what you're saying it sounds like this is an estate in
> probate court. So the answer to your question is that it
> depends on what the will says. If it's not in court but
> being distributed from a testementary trust, it depends on
> what the trust says.
>
> When an estate goes through probate, generally property left
> to any beneficiary must be simply given without
> restrictions. When a beneficiary is a minor, the property
> should go to the parent to hold for the child.
>
> If your wife wants something else, she should go to the
> probate court and ask the judge for permission to set up
> whatever she wants. If she's got a good enough reason, the
> judge may go along, if the law allows it.
>
> Otherwise she can't.
The lawyer says the approach is okay, as the will has under
"Contingent Trust" what is apparently a fairly standard
clause A about having discretion to provide support for
"health, support, education, and maintenance" of the
beneficiaries preceeding clause B, which has more detailed
instructions of how to distribute the remaining assets. At
the time that the will was written the assets were much
larger, so taking the simple route of getting the biggest
bang for the buck via education would seem by far to make
the most sense for the kids (and for their parents too, even
though legally I suppose that's not a consideration) rather
than tying up a relatively small amount of money for them to
claim many years from now. And at the same time my wife
feels that would be loyal to the spirit of what was intended
in terms of helping the kids in the future. If there were
say six figures involved it would be a different story, and
clause B would come into play more than the standard clause
A.
So going the 529 route is okay - the only question is how to
set up ownership of that since the beneficiaries are still
minors. If she let the parents own it, then maybe she'd be
delinquent in her duties by in effect turning over assets to
someone other than the beneficiaries. It's not a matter of
not trusting the parents or anything like that, but she
wants to be sure it's set up following the intent of the
will as closely as possible to avoid even the remote
possibility of getting accused of mishandling it later.
Does this explain the situation better?
--
Blake Krass
bkrass@email.com
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