If a person has setup a living revocable trust, can that person put a clause in the trust that upon death of the grantor the assets of the living revocable trust be paid out to a different trust that was setup before the person died? Is there any disadvantage in doing this? Do the two trusts have to have the same trustees?
Add a comment
|
1 Answer
If a person has setup a living revocable trust, can that person put a clause in the trust that upon death of the grantor the assets of the living revocable trust be paid out to a different trust that was setup before the person died?
Yes.
Is there any disadvantage in doing this?
It costs more and is more trouble to have two trust instruments than it is to have one trust instrument, so you would only do this if there was a good separate reasons for setting up the second trust during life (e.g. to shield life insurance proceeds from gift and estate taxation, or in the case of a qualified domestic trust created for a non-citizen spouse to receive lifetime gifts).
Do the two trusts have to have the same trustees?
No. But you could also have separate trustees and different trust terms at different phases of a single revocable trust (before and after death, for example), which is the more common approach.
-
1Please assume that both trusts are already setup. In addition, one of the trusts is irrevocable.– BobMar 1 at 3:12