When Dick and his wife, Phyllis, first came to Newland & Associates many years ago, they decided to create a Joint Revocable Living Trust (JRLT). Dick, a successful real estate developer, owned multiple houses in his home area and decided to give each of his two daughters, Delta and Dawn, an unencumbered residence. To that end, Dick and Phyllis’s JRLT provided that the Trust they created would be subject to various conditions upon the death of the first spouse. For this article, the most important of these conditions was that the surviving spouse would have control over the Joint RLT and could make amendments and changes as he/she believed were necessary.
Over the course of many years, one of the daughters, Dawn, married a person that Dick and Phyllis did not approve of. During Dick’s long illness from brain cancer, he had many problems and lingered for years before finally passing on. During all that time, he was disappointed that Dawn never visited him, while Phyllis and other children visited Dick often.
Dick was also bothered by the fact that Dawn’s second husband, from Dos- Mentos, Spain (and the father of six unclaimed children) had legal problems. So, Dick decided that it probably wasn’t a good idea to give Dawn and her erstwhile husband a free house. After Dick passed on, the burden of making the final decision concerning Dawn and the free house belonged with Phyllis. Should she deprive Dawn of the house that Dick had originally promised her?
During Dick’s terminal illness, he had expressed reservations about giving Dawn a free house while fearing that Dawn’s questionable husband, would benefit from the gift. Phyllis eventually decided that she would amend the JRLT, which she had the right to do. In the amendment, the house was taken away from Dawn, so Dick’s final wishes could be fulfilled.
What is the message here? The message is that because RLTs are “revocable,” it is possible to change them while both spouses are alive or after one spouse is dead, providing that the surviving spouse is given the authority to amend the RLT. If the surviving spouse has the authority to amend the RLT, and it appears that is the wish of the deceased spouse to do so, the surviving spouse can continue with a clear conscience. In a case like this, Phyllis can change the Trust and deprive Dawn of the free house that Dick and Phyllis—in a normal pattern of distributing parental benefits—would give a child. The fact that the property was promised, but not in fact given, allows the surviving spouse—as the Sole Trustee—to make amendments to the JRLT.
Bottom line: In cases such as this, where communication with Dawn had already been made, is it still possible to make changes? Yes. Will it create hard feelings? Yes. Sometimes, however, actions are taken by Grantors (Creators) of trusts that are not favorable to, or agreed with, by the surviving children.
If you need help to handle such situations, contact Newland & Associates.