Legal Question in Wills and Trusts in Indiana
living trust
My parents have set up a living trust regarding a lake house. I believe it is called a ''reversible'' trust---after 10 years ownership of the property passes to myself and my two siblings. We will then lease the property back to my parents for $1/year for as long as one or both them live. My brother has judgments against him in Iowa for unpaid alimony and child support and left the US after a bitter divorce. My concern is that his ex-wife will pursue execution of those judgments against this trust property. What can we do to prevent liens from attaching to this property when title passes to the 3 of us? If my parents alter the trust document and remove his name as beneficiary of the trust, does this start the 10 year clock all over? Thank you for your help.
1 Answer from Attorneys
Re: living trust
The trust you describe is probably a so-called
"Clifford Trust" or some variant thereof. These
trusts were popular a while back to allow wealthy
people to make gifts to their children of a
future interest in the property. The best way
out for your distressed sibling would be if there
is any way he can "disclaim" his interest in the
trust. Filing a disclaimer is a very time-sensitive
matter, so it would need to be done soon. Another
way out could be if he owes any family members
any money and can repay them with his interest in
the trust. This will depend on the amount owed
and the fair market value of the trust property.
Finally, it is possible but unlikely that a court
would modify or invalidate the trust. I wish you
the best of luck with this difficult situation.
Of course, if the trust is revocable or subject
to modification, then a simple amendment to the
trust would disinherit your brother and solve
the problem.
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