TRUSTS: WHAT HAPPENS WHEN YOU HAVE MULTIPLE TRUSTS?
As most estate planning attorneys will tell you, Trusts are considered the gold standard in estate planning. They allow the greatest amount of freedom when determining your wishes, can provide the most amount of information/instruction to your heirs as they distribute your property, and they allow you to skip the probate process, which is a year long process or longer which taxes the estate numerous amounts of time and money.
However, just because the Trust is what most attorneys suggest, it does not mean that there are not issues that can come up in trust administration. The biggest issue can arise when a person has a new trust drafted for them when they already have an old one. Many people will have trusts created early in their lives as a cost saving measure and will have an attorney draft up a trust in which they put all of their current property. Sometimes though, for a variety of reasons, a new trust drafting can become necessary. One of the most common reasons is that a person’s life or family dynamics have changed so significantly that the instructions and directions contained within the previous trust are so unapplicable that they could hinder the administration of the trust.
The most common solution to this issue is simply re-stating the trust. When you re-state the trust, you are essentially updating the old trust document with new instructions, but without eliminating the previous trust. This is a relatively straightforward process and most attorneys are happy to do re-statements of trusts to make updating the instructions easy.
A common issue that can occur in the world of trusts though, is that many people do not realize that they can have their original trusts re-stated and instead decide to create entirely new trusts. This can be an issue because if the newest trust does not contain language terminating any prior trusts, or if the prior trust has been deeded property such as real estate, resolving the multiple trusts can be difficult, especially when the original creator of the trust passes away before addressing the issue.
In a situation like above, it can be possible that one person will have multiple trusts which each holding different property. You can encounter a situation where a prior trust holds the real estate property of an estate, while all personal property is held in an entirely different trust. In this event, unfortunately the property must be administered pursuant to the differing instructions of the respective trust which holds said property, which can be even more of a problem if those instructions conflict with each other.
If you currently have a trust which you feel needs to be updated or changed, or your are considering drafting a trust for the very first time, please do not hesitate to contact the law office of Andrew Szocka P.C. we are an experienced estate planning law firm with a long history of trust creation and management. We will be happy to help you address any and all issues with your estate. Please call us at 815-455-8430 or shoot us an email at info@szocka.com and we would be pleased to assist you!