Legal Question in Wills and Trusts in California
trust language effective?
Is Language effective to establish a bypass trust & to eliminate it if estate tax repealed or entire Trust Estate less than exemption amount?
6.2 Upon death of either Trustor, the Trustee shall, subject to 6.5, divide the Trust Estate into Trust A & Trust B
(a) Trust A shall consist of: the Surviving Trustor�s interest in all property in the Trust Estate & other assets the Trustee selects. If Paragraph 6.5 does not apply, other assets means assets which qualify for Marital Deduction to reduce the taxable estate to an amount on which no federal estate tax is due and the federal unified credit available is fully utilized
(b) Trust B shall consist of all of the interest in each asset not allocated to the principal of Trust A
6.5 The Trustee may eliminate Trust B upon the death of the first Trustor to die if the value of Trust A and Trust B together are less than the tax exemption, or if the estate tax has been repealed. Trust A shall consist of the entire Trust Estate. On the death of the Surviving Trustor, Trust A shall be distributed per instructions under Trust B which shall be read as Trust A.
1 Answer from Attorneys
Re: trust language effective?
The trust language means what it says. Under the circumstances it describes. When the first trustor (probably a co-trustee) dies the surviving trustee (if one is adequate per the language of the trust, and who is probably one of the two original trustors) has the option of not dividing the trust. The language in your message is typical. And when in doubt notify the beneficiaries of what is going to happen, and give them time to complain (disapprove).
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