Full question:
My mother, recently deceased, had an irrevocable trust. In that trust, she left monies to 3 grandchildren to be held in trust. Do I need to set up new trusts for each of the three of them, and does that make the original trust void after all monies are dispersed?
- Category: Trusts
- Date:
- State: North Carolina
Answer:
The terms of the trust will determine whether it can be terminated. A trust may also end if it is no longer economical to maintain. The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) provide a way for minors to own property, such as money or securities. These acts allow for the transfer of assets to a minor without needing a separate trust document. Under UGMA/UTMA, the donor must appoint a custodian to manage the assets until the minor reaches the age of majority, typically 21 years old.
When a gift is made under UGMA/UTMA, it is irrevocable, and the minor receives legal title to the gift. The custodian manages the assets and has discretion over expenditures for the minor's benefit. If the custodian fails to comply with UGMA/UTMA terms, they may face legal consequences similar to those of a trustee who does not follow a traditional trust's terms.
In your case, whether you need to set up new trusts for each grandchild depends on the original trust's provisions. If the original trust specifies that funds are to be held in trust for each grandchild, you may need to establish separate trusts for them. The original trust will not be void until all assets have been distributed according to its terms.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.