Can I Pay for Slide Scanning With Living Trust Money?
Living trusts hold, manage and distribute property in accordance with the terms of a written trust agreement. If the intent of the trust creator, or the grantor, is to remove assets from his estate for estate tax purposes, such as a large life insurance policy, he would establish an irrevocable living trust where control of the trust property transfers to an independent trustee. In contrast, a revocable living trust removes property from probate but not from the estate while maintaining control of trust assets during his lifetime. The grantor, who has the right to terminate the trust at any time, usually appoints himself trustee and primary beneficiary to manage trust assets and receive all income and distributions.
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Trustee Responsibilities
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A trustee in any type of trust is responsible for maintaining the trust property in accordance with the trust document for the benefit of the named beneficiaries. He is considered to be a fiduciary, one who holds a position of trust, which the law may hold to a higher standard. In a revocable trust, the grantor, trustee and primary beneficiary may be the same individual, which explains why you can use trust income for any legal purpose. Even if the trustee and beneficiary are separate individuals, the beneficiary's request for trust money to pay for slide scanning would probably be granted as long as the trustee believed the request had merit.
Trust Agreement
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The declaration of trust or trust agreement in a revocable trust identifies who is to receive trust income and under what circumstances to use the trust principal. When the grantor's aim is to maintain full control over the trust property during his lifetime, the agreement will typically grant broad discretionary power to the trustee/grantor equal to the property owner's rights before title transferred to the revocable trust. Finally, the trustee has a power of appointment over the trust property, which means he has the legal right to direct ownership of principal and income to the beneficiaries.
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Grantor's Incapacity or Death
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If the intent of the grantor is to provide financial assistance to a family member engaged in a photographic slide and movie film restoration endeavor, those wishes should be declared in the trust agreement so that the grantor's death or incapacity would not interrupt that assistance. In any case, the trust should always name a successor trustee to carry on the wishes of the incapacitated grantor/trustee and to manage and distribute trust assets in the event of the grantor's death.
Financial Assistance after Death
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When a revocable trust grantor dies, the trust becomes irrevocable and the assets go under the control of the named successor trustee. Any remaining property in the decedent's probated estate retitles to the trust as directed in the "pour-over" will. At this point, the irrevocable trust replaces the will as the document detailing the management and distribution of trust property to the beneficiaries. Now, the trustee who may be a family member or a commercial trustee, such as a bank, will have the responsibility of paying creditors, filing tax returns and distributing proceeds as directed in the trust agreement. Unless the trust document specifies continued financial support for the individual engaged in slide scanning, the trustee will be guided solely by the terms of the trust instrument.
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References
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