April 2012

One of the most important decisions anyone can make when creating an estate plan is the selection of their successor Trustee(s).  In a revocable living trust (RLT), these are the people who will take over your financial/business affairs upon your disability and/or death.  Unfortunately, I feel that many individuals approach this decision from the wrong direction.  Too much weight is often placed on a candidate’s personal business success and/or technical ‘smarts.’  Although these things are important, I advise clients that there are three inherent qualities that you want in your successor trustee that are not as much a learned skill; but instead, a hard wired part of their being.  These three are as follows: 1) absolute honesty; 2) dependability; 3) and the ability to take counsel from others.  All of the technical skills and information required to administer your trust can be learned (or purchased in the form of professional assistance of CPAs, Financial Advisors and Attorneys); however, if your successor trustee does not have the three inherent qualities I described, all of the technical prowess in the world may not be enough to protect your beneficiaries from mismanagement of trust assets.  At JGB, we take the time to help each client work through their respective choices for successor trustees so that they can intelligently select the appropriate command and control system within their estate plan.

- Jeremy

Under the Garn-St. Germain Deposity Institution’s Act of 1982 a mortgage lender may not exercise a due on transfer option when a mortgaged property is transferred to a Revocable Living Trust.  Unfortunately, many mortgage lenders have interpreted this act to only apply to a primary residence, and not other mortgaged properties like vacation homes.  One option, although not preferable, is to leave the property outside the Trust.  The property is then subject to probate, and not controlled by the terms of the trust.  Another common option for dealing with a troublesome mortgage lender is to utilize a “Pocket Deed”.  This is a standard deed transferring property to the Revocable Living Trust, which simply has not been recorded at the courthouse after execution.  The property transfer is effective upon execution, but since it is not recorded with the court, the due on transfer option with the mortgage institution is not triggered.  Careful consideration should be given to using any of these options on a mortgaged property.

-Spencer