QUESTION
Can I legally give up my rights to part of my trust to other trust members?
Asked on May 15th, 2013 on Trusts and Estates - Michigan
More details to this question:
My father left my sister and me a substantial amount of money in a trust. My sister obtained her trust outright, she gets cash upfront. I, on the other hand, only get 4% of my trust per year. My father had a large stamp collection worth close to $400,000 that my sister and I plan to sell. Because of how my trust is set up, the $200,000 share of mine will go back into the trust while my sister, again, will get cash. To circumvent this, as I am in need of money now for a business, my sister had the idea that I could give up my rights to the stamps and she will sell them and get the full 400K+, at which point she will give me half of the total in cash. Upon telling the bank about this idea, the trust manager said absolutely not. My question is, does the bank have any right to say I cannot give my portion of the stamps to my sister? What she does with the money after the fact should be none of the banks business. Do I have a legal foothold here?
1 ANSWER
Criminal Defense Attorney serving Williamston, MI
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Law Office of Robert G. Fleming
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Without reviewing the Trust document I can not say what your rights are. But if the stamp collection is part of the Trust it would be highly unusual for either you or your sister to be able to sell it without the Trustee's permission.
But, even if you could do so, it is a truly terrible idea on many levels: once you have given your rights to the stamp collection to your sister, and have acknowledged that it was a gift, she is under no obligation to give you any portion of the proceeds when she sells it. In addition, by making a gift of your interest, which appears to be in excess of $200,000.00 you potentially incur gift tax liability, then assuming your sister does give you 50% of the proceeds when she sellls the collection, she also incurs potential gift tax liability. There are many other good reasons not to proceed with this plan as well.
Answered on May 16th, 2013 at 11:31 AM