The Trust within a Will if minors will inherit- Testamentary Trust

The Trust within a Will if minors will inherit- Testamentary Trust

 

     The Will usually provides for a trust to hold money for children or beneficiaries under age of 21. If the Will provides for a Trust, the Trustee will have to sign paperwork with the Surrogate/ Probate Court. For example, in NJ when a Testamentary Trust needs to be set up, the named Trustee under the Will must sign an Acceptance of Testamentary Trusteeship and an Authorization To Accept Service of Process (Power of Attorney).  The Surrogate, prior to preparing the forms will need:  1) the name and residing address of the named Trustee and 2) names and addresses of the beneficiaries and their interest under the Testamentary Trust 3) Article under which the Testamentary Trust appears and 4) the title of the Testamentary Trust.  The Surrogate will issue Letters of Trusteeship and a Trustee Short Certificate. 

 

        A Substitute Trustee occurs when the first appointed Trustee dies or resigns or is removed before completing his/her duties as Trustee, as required.  This action must be brought to the Superior Court Probate Part.  The papers are filed with the Surrogate’s Court in the County of original procedure.  After the Superior Court Probate Part enters a Judgment appointing a Substitute Trustee, the appointed Substitute Trustee must go to the Surrogate’s Court to sign an Acceptance of Substitute Trusteeship and an Authorization To Accept Service of Process (Power of Attorney). The Surrogate will issue Letters of Substitute Trusteeship and a Substitute Trustee Short Certificate Source http://nj.gov/counties/mercer/officials/surrogate/s_trusteeships.html

 

     The Uniform Probate Code addresses Testamentary Trusts for children. SECTION 3-913. DISTRIBUTIONS TO TRUSTEE.

(a) Before distributing to a trustee, the personal representative may require that the trust be registered if the state in which it is to be administered provides for registration and that the trustee informs the beneficiaries as provided in [Section 813 of the Uniform Trust Code]. 

(b) If the trust instrument does not excuse the trustee from giving bond, the personal representative may petition the appropriate court to require that the trustee post bond if he apprehends that distribution might jeopardize the interests of persons who are not able to protect themselves, and he may withhold distribution until the court has acted. 

(c) No inference of negligence on the part of the personal representative shall be drawn from his failure to exercise the authority conferred by subsections (a) and (b). 

Comment 

This section is concerned with the fiduciary responsibility of the executor to beneficiaries of trusts to which he may deliver. Normally, the trustee represents beneficiaries in matters involving third persons, including prior fiduciaries. Yet, the executor may apprehend that delivery to the trustee may involve risks for the safety of the fund and for him. For example, he may be anxious to see that there is no equivocation about the devisee’s willingness to accept the trust, and no problem of preserving evidence of the acceptance. He may have doubts about the integrity of the trustee, or about his ability to function satisfactorily. The testator’s selection of the trustee may have been based on facts which are still current, or which are of doubtful relevance at the time of distribution. If the risks relate to the question of the trustee’s intention to handle the fund without profit for him, a conflict of interest problem is involved. If the risk relates to the ability of the trustee to manage prudently, a more troublesome question is posed for the executor. Is he, as executor, not bound to act in the best interests of the beneficiaries? 

In many instances involving doubts of this sort, the executor probably will want the protection of a court order. Sections 3-1001 and 3-1002 provide ample authority for an appropriate proceeding in the court, which issued the executor’s letters. Absent a court order, the personal representative should consider demanding that the trustee notify the trust beneficiaries of the distribution as authorized by subsection (a). States that have not enacted the Uniform Trust Code should substitute a reference to their local statute on a trustee’s duty to keep the beneficiaries informed. 

In other cases, however, the executor may believe that he may be adequately protected if the acceptance of the trust by the devisee is unequivocal, or if the trustee is bonded. The purpose of this section is to make it clear that it is proper for the executor to require the trustee to register the trust and to notify beneficiaries before receiving distribution. Also, the section complements Section 702 of the Uniform Trust Code by providing that the personal representative may petition an appropriate court to require that the trustee be bonded. 

The Uniform Probate Code is an excellent source for Trust and Will language even in states that still have not adopted it. Source: https://www.uniformlaws.org/viewdocument/final-act-with-comments-135?CommunityKey=35a4e3e3-de91-4527-aeec-26b1fc41b1c3&tab=librarydocuments