Q: When my biological father and stepmother first set up their revocable living trust last year, my father said, as his trust, it gifts the family vacation lakefront home from his first marriage to me, his biological daughter of that marriage. Recently, my father passed and my stepmother advised me that she is no longer in agreement with gifting me the lake home. She is now planning to sell it for her own individual financial gain and benefit. Can my stepmother simply ignore my father’s wishes and sell the lakefront home, thereby depriving me from receiving it?
A: A revocable trust is a method of protecting assets from probate after the death of the grantors of the trust. If a married couple establishes a revocable living trust in which both spouses are the grantors of the trust, its specific language will dictate whether it becomes irrevocable upon the death of one of the spouses or upon the death of the second spouse. If both spouses must die before the trust becomes irrevocable then control of a joint revocable trust automatically rolls over to the surviving spouse.
A couple may choose to make a trust irrevocable at the passing of one of the grantors if they’re concerned that the surviving spouse may make changes for his or her own individual gain or change the beneficiaries, particularly with the intention to disinherit a particular beneficiary. Another concern would be that a spouse might be convinced to make changes to the trust under the influence of another individual, such as a new spouse or a beneficiary of the trust.
So, to answer your question, unless your father set up an individual irrevocable trust in his name only that owned the lake house or included language within the joint revocable trust giving you the lakefront home at his death even if your stepmother survived him, then your stepmother would not be entitled to sell it.
Because the revocable trust is designed to protect assets from probate and to reduce the taxes paid by the estate, the trust should be set up by an attorney with experience in revocable trusts. A couple’s attorney should be able to draft language within the trust to prepare for every possible contingency regarding how the trust assets will be managed upon the death of the first spouse and after the death of both spouses.
If children of a previous marriage are concerned about protecting assets acquired by their parent prior to remarrying, they should consult with their parent or collectively meet with an estate planning attorney. This will help them understand the potential consequences of a parent remarrying and how family assets may be lost without proper planning.