What Happens When Trustee Denies Trust Revocation?
Trust revocation
Question:
My mom and stepdad had a trust. After his death, mom wanted to be rid of the trust so we revoked it. My brother now claims (without a copy of the trust) that he is trustee and as my mother has dementia and lives in care, he is going to sell the property now putting proceeds into the trust account. Mom needs the money for her care. Can he do this?
Response:
It’s hard to say without knowing more. I’m not sure what you mean by “we revoked it.” Typically only the grantors of revocable trusts may revoke them. This would mean that if the trust was revocable, your mom and stepfather could have revoked it. Some trusts become irrevocable when one of the grantors passes away, so your mom may or may not still have had the power to revoke the trust.
Trusts may also be terminated rather than “revoked.” This is typically done by distributing out the trust assets, which gets us to the question of whether the trust assets were retitled in your mother’s name.
Trusts only control the property, whether real estate or bank and investment accounts, actually titled in the name of the trust. So, if the former trust property is no longer in the name of the trust, your brother should have no control over it even if he is the trustee.
But let’s assume that your mother “revoked” the trust but didn’t take the second step of retitling the trust assets. In that case, we would have a somewhat sticky situation because the assets would be titled in the name of a trust that no longer exists. The best bet would be to retitle the assets now, but that might require your brother’s cooperation. If he won’t cooperate, the only solution may be a court order as to how the trust assets are to be held, whether by the trust or in your mother’s name.
I understand that the distinction between “revoking” a trust and “terminating” may seem like legal gobbledygook, but the difference can matter.
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