Posts tagged with "beneficiary"

Trustee Interpretation of Ambiguous Trust Provisions will not be Changed by a Court Without Evidence of a Clear Abuse of Trustee Discretion

In a recent case before the Superior Court, four trust beneficiaries filed a three-part complaint against the trustees of a trust created by their mother.  The complaint alleged breach of fiduciary duty, unjust enrichment, and other charges. The trial court ruled that the trustees had properly distributed the trust interests and entered judgment in their favor.

In 1953, a trust indenture known as the Hembdt Trust was drafted with assets consisting of royalty interests in oil, gas and mineral rights.  During her lifetime, the settlor and beneficiary of this trust (“the decedent”) married and had ten children.  Upon her death, the terms of the trust provided that the royalty interests would pass to “his or her legal representatives, heirs at law or next of kin in accordance with the provisions of law applicable to the domicile of the deceased beneficiary.”  In 1967, the decedent died. Pursuant to her will, several testamentary trusts were created, including a testamentary trust for the benefit of her husband (“marital trust”) and a trust for her children (“children’s trust”).  The trustees and executors of the decedent’s will determined that the provision in the Hembdt Trust required the trust’s royalty interests to pass into her estate which, in accordance with her will, resulted in these interests being distributed in a 54/46 ratio between the marital trust and the children’s trust.

The beneficiaries of the children’s trust argued that the entirety of the royalty interest should have been distributed to them as the decedent’s heirs at law because the term “legal representatives” in the Hembdt Trust provision, used under the circumstances provided, could only be interpreted to mean the children of the decedent.  The decedent’s husband, in his capacity as a fiduciary of the trusts, argued that the beneficiaries’ interpretation was inconsistent with the language of the trust instrument and the law.  He argued that the term “legal representatives” was used in conjunction with “heirs at law” and “next of kin;” therefore, the clear intent of the Hembdt Trust provision was that upon the death of the individual beneficiary, his or her interest would pass to: (1) the beneficiary’s legal representatives, which would be the beneficiary’s executors, if the person died testate, to be administered according to the beneficiary’s will, or the beneficiary’s administrators, if the person died intestate and a probate estate was opened; (2) the beneficiary’ heirs at law if the person died intestate and no probate estate was opened; and (3) the beneficiary’s next of kin if there were no heirs at law. The decedent’s husband further argued that if all three conditions existed, then the distributions would have to be in accordance with Connecticut law, which requires that, when a decedent leaves both a spouse and children, they both inherit.  Finally, the decedent’s husband argued that Connecticut law requires that if a decedent leaves a will, a distribution is made according to the will.   Conn. Gen. Stat. § 45a-431.  The remaining trustees adopted the arguments of the decedent’s husband.

According to Connecticut case law, a court’s role in the construction of a trust instrument is to determine the meaning of what the grantor stated in the trust instrument and not to speculate upon what the grantor intended to state in the instrument. Connecticut Bank & Trust Co. v. Lyman, 148 Conn. 273, 278-79, 170 A.2d 130 (1961).  Language in the trust instrument is to be accorded its common, natural and ordinary meaning and usage.  WE 470 Murdock, LLC v. Cosmos Real Estate, LLC, 109 Conn.App. 605, 609, 952 A.2d 106, cert. denied, 289 Conn. 938, 958 A.2d 1248 (2008) (internal quotation marks omitted). Furthermore, no language will be construed as to remove a trustee from equitable control; courts may intervene only to protect and preserve the trust in circumstances where the trustees have abused their discretion.  Gimbel v. Bernard F. & Alva B. Gimbel Foundation, Inc., 166 Conn. 21, 34, 347 A.2d 81 (1974)

Connecticut case law has established that the phrase “legal representatives” in a testamentary instrument is an ambiguous or equivocal term. Smith v. Groton, 147 Conn. 272, 274–75, 160 A.2d 262 (1960).   In interpreting the trust provisions, the court determined that the language did not permit the decedent’s beneficial interest to pass to each of the three categories (“legal representatives, heirs at law and next of kin”) or to pass to different recipients depending on an exercise of discretion (“legal representatives, or heirs at law, or next of kin”).  For that reason, the court found that the terms “legal representatives,” “heirs at law,” and “next of kin” did not conflict and that the provision required that the decedent’s beneficial interest pass to the recipients in the order clearly listed the trust instrument.  Therefore, the trustees did not abuse their discretion in determining that the royalty interests passed to the executors, as the decedent’s legal representatives, to be distributed to the marital trust and children’s trust in accordance with the decedent’s will.

Because the trial court did not find that the trustees of the decedent’s trusts abused their discretion, the court refused to upset their determination of how the decedent’s interests should be distributed.

Should you have any questions relating to wills, trusts, estates and other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Heath v. Heath, CV094044709S, 2012 WL 2477953 (Conn. Super. Ct. June 5, 2012)

What is a Pre-Need Funeral Services Contract?

A pre-need funeral services contract allows an individual to set aside funds, before his or her death, to be used specifically to pay for funeral expenses. Under the terms of such a contract, a “purchaser” signs the contract and advances funds, which are held in an escrow account for the purpose of paying for future funeral services for the “beneficiary” upon his or her demise. See C.G.S. §42-202. A pre-need funeral services contract may only be sold by a funeral director licensed by the public health commissioner. See C.G.S. §42-201.

There are strict requirements for such contracts under Connecticut law. For example, funeral services contracts must be in writing, and must contain the following:

(1) The name, address, telephone number and Social Security number of the beneficiary and the purchaser;

(2) The name, address, telephone number and license number of the funeral director for the funeral service establishment providing the goods or services;

(3) A list of the selected goods or services, if any;

(4) The amount of funds paid or to be paid by the purchaser for such contract, the method of payment and a description of how such funds will be invested and how such investments are limited to those authorized pursuant to subsection (c) of section 42-202;

(5) A description of any price guarantees by the funeral service establishment or, if there are no such guarantees, a specific statement that the contract contains no guarantees on the price of the goods or services contained in the contract;

(6) The name and address of the escrow agent designated to hold the prepaid funeral services funds;

(7) A written representation, in clear and conspicuous type, that the purchaser should receive a notice from the escrow agent acknowledging receipt of the initial deposit not later than twenty-five days after receipt of such deposit by a licensed funeral director;

(8) A description of any fees to be paid from the escrow account to the escrow agent or any third party provider;

(9) A description of the ability of the purchaser or the beneficiary to cancel a revocable funeral service contract and the effect of cancelling such contract;

(10) For irrevocable contracts, a description of the ability of the beneficiary to transfer such contract to another funeral home; and

(11) The signature of the purchaser or authorized representative and the licensed funeral director of the funeral service establishment.

See C.G.S. §42-200(b). A funeral services contract must also contain a statement that if the particular merchandise provided for in the contract is not available at the time of death, the funeral service establishment will furnish merchandise similar in style and at least equal in quality of material and workmanship to the merchandise provided for in the contract.  See C.G.S. §42-202(g). Funeral services contracts should not be confused with burial insurance policies, which are separately codified in the Connecticut General Statutes, under Section 38a-464.

For further information on pre-need funeral services contracts in Connecticut, see Chapter 743C of the Connecticut General Statutes. The General Statutes can be found online at: http://www.cga.ct.gov/. Additional information is available in the State of Connecticut’s Office of Legal Research Report on pre-need funeral services contracts online at: http://www.cga.ct.gov/2007/rpt/2007-R-0578.htm.

Probate Courts Hearing a Conservator’s Application to Transfer Income from a Conserved Person’s Estate Must Provide Notice to All Parties Who May Have an Interest in the Estate

In a recent case before the Superior Court of Connecticut, a named beneficiary of a will filed an appeal to reverse a probate court order that authorized the conservator of his benefactor to transfer all her assets into trusts.  The conservator brought a motion to dismiss the appeal based on  lack of standing.  The court held that the named beneficiary had standing to file his appeal and denied the motion to dismiss.

In January 2008, the probate court appointed John Nugent (“Nugent”) as the conservator of the person and the estate of Josephine Smoron.  In April 2009, the Nugent applied to the probate court to approve the creation and funding of a revocable trust and an irrevocable trust for Ms. Smoron.  At the time of the May 2009 probate court hearing, Samuel Manzo (“Manzo”) was a named beneficiary under Ms. Smoron’s will. The probate court approved Nugent’s application and authorized the creation and funding of the two trusts; however, the hearing was held without providing notice to Manzo or other named beneficiaries of Ms. Smoron’s will.  Nugent, in his capacity as conservator, established and funded the trusts by quitclaiming real property owned by Ms. Smoron to the irrevocable trust and by depositing over $218,000 of her assets to the revocable trust.  Pursuant to the terms of the trusts, upon Ms. Smoron’s death, the proceeds were to be distributed to three churches, with no provisions for the beneficiaries named under will.  In June 2009, Ms. Smoron died.

Nugent argued that Manzo’s appeal of the probate orders authorizing the creation and funding of Ms. Smoron’s trusts must be dismissed because Manzo was a “mere prospective heir” under Ms. Smoron’s will and, therefore, lacked a sufficient legal interest to challenge the rulings of the probate court.  However, in the instant case, the Superior Court found it to be a provable fact that Manzo was a beneficiary of Ms. Smoron’s will rather than a prospective heir.

Connecticut law specifically requires the probate court to hold a hearing and provide notice to “all parties who may have an interest” in the estate before authorizing a conservator to transfer his conserved person’s property.  Conn. Gen. Stat. § 45a-655(e).  The same law further provides that the probate court should also consider the provisions of an existing estate plan before authorizing the conservator to make transfers of income or principal from the estate of the conserved person.  The Superior Court found that, as a named beneficiary under Ms. Smoron’s will at the time of the May 2009 order, Manzo had both an interest in the estate and an interest in ensuring that the probate court considered Ms. Smoron’s will as part of the existing estate plan.  Therefore, Manzo should have received notice of the probate court hearing.

Therefore, the Superior Court held that, as a named beneficiary under the will, Manzo was aggrieved by the May 2009 probate court order, should it be permitted to stand. Pursuant to that order, Nugent not only placed Ms. Smoron’s assets in the trusts, but he also designated three churches as beneficiaries of the trusts upon Ms. Smoron’s death. The court characterized these actions as effectively disinheriting Manzo and nullifying any provisions that had been made for him under Ms. Smoron’s will.  Based these facts, the trial court determined that Manzo was a proper party to invoke the jurisdiction of the court.

The Superior Court denied Nugent’s motion to dismiss and permitted Manzo to go forward in the Superior Court of Connecticut with his appeal of the probate court orders authorizing the creation and funding of trusts for Ms. Smoron’s estate.

Should you have any questions relating to wills, trusts, estate planning or other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Manzo v. Nugent, X04HHDCV105035142S, 2012 WL 1959076 (Conn. Super. Ct. May 8, 2012)

Property Conveyance May Satisfy the Statute of Frauds Requirement to Create a Trust

In a recent case before the Connecticut Superior Court, two daughters sought a declaratory judgment as to the validity of an unsigned document purporting to be their deceased mother’s trust agreement and quiet title to a contested piece of real estate.  The daughters contended that the trustees held the contested property in fee simple; therefore, the real estate was not part of the mother’s estate to be distributed in accordance with her will.  The trial court concluded that the trust was validly created and the contested real property was a trust asset.

The original executed copy of the mother’s 2004 trust agreement could not be found after her death.  Two of her daughters sought a court judgment declaring that an unsigned copy of their mother’s trust agreement created a valid and enforceable inter vivos trust, They contended that an irrevocable trust had been created in August 2004 when their mother executed and recorded the warranty deed that conveyed the contested property to the trust because the conveyance and circumstances surrounding it manifested their mother’s clear intent to create that trust.  The remaining heirs denied these allegations and raised several special defenses, including that the unsigned trust agreement did not comply with the Statute of Frauds, that the deed was invalid, that one or both of the daughters exerted undue influence over their mother and that their mother lacked capacity when she created the trust.

The requisite elements of a valid and enforceable trust are: (1) a trustee, who holds the trust property and is subject to duties to deal with it for the benefit of one or more others; (2) one or more beneficiaries, to whom and for whose benefit the trustee owes the duties with respect to the trust property; and (3) trust property, which is held by the trustee for the beneficiaries.  Goytizolo v. Moore, 27 Conn.App. 22, 25, 604 A.2d 362 (1992).  According to the Restatement of Trusts, if the owner of property declares himself to be the trustee of the property or transfers it “in trust” for a named person, such writing sufficiently demonstrates the purpose of the trust to satisfy the writing requirement of the Statute of Frauds.  Restatement (Second) of Trusts § 46 cmt. (a) (1959).

The daughters alleged that the August 2004 warranty deed conveying the contested property to their mother’s inter vivos trust satisfied the Statute of Frauds because it set forth the trust property, the beneficiaries and the purpose of the trust with reasonable definiteness. Because the warranty deed transferred the property from the mother individually to the inter vivos trust, it was as if the property was transferred “in trust” for a named person and the warranty deed was a declaration of a passive trust.  They also contended that because the mother signed the warranty deed as trustee, she was declaring herself to be the trustee of the property for the beneficiaries of the inter vivos trust.   Although the court concluded that the execution of the warranty deed by itself funded rather than created the inter vivos trust, the court also concluded that the warranty deed was sufficient evidence to satisfy the Statute of Frauds.  The deed was a writing signed by the mother demonstrating that she manifested an intent to create the trust and impose the duty of a trustee upon herself.  Additional testimony from witnesses at the trial supported the court’s conclusion that the mother executed the trust agreement, along with her will and the warranty deed, in August 2004 as part of her overall testamentary plan and that unsigned copy of the trust agreement submitted by the two daughters was a true copy of the agreement which established the terms of the agreement.

The heirs contesting the trust alleged that the August 2004 warranty deed conveying the contested property to the mother’s inter vivos trust was invalid because the deed named the trust rather than the trustee as the grantee of the property.  According to the Connecticut Standards of Title, a grantee of real property must be in existence and have capacity to take and hold legal title to land at the time of the conveyance.  A trust does not have such capacity:  the trustee, or other fiduciary of the trust, is the appropriate grantee.  See Connecticut Bar Association, Connecticut Standards of Title (1999), standard 7.1, comments 1 and 4.  Connecticut law, however, provides that deeds with certain defects are considered to be valid unless an action challenging the deed and a lis pendens are recorded in the town land records within two years of recording the defective instrument.  Conn. Gen. Stat.  § 47-36aa(a).  This statute covers defective deeds made to grantees that are not recognized by law as having the capacity to take or hold an interest in real property.  Conn. Gen. Stat.  § 47-36aa(a)(4).  Because the heirs contesting the trust did not file an action challenging the validity of the deed within two years of its recording, the trial court concluded that the August 2004 warranty deed had been validated by the operation of the statute, which confirmed the conveyance to the grantee and any subsequent transfers of the interest by the grantee to any subsequent transferees.

The heirs contesting the trust alleged that the trust was void because one or both of the two daughters seeking to enforce the trust exerted undue influence over their mother during its making.  Undue influence is the exercise of sufficient control over a person in an attempt to destroy his free agency and constrain him to do something other than what he would do under normal circumstances. Connecticut case law sets out four elements necessary for a finding of undue influence:  (1) a person who is subject to influence, (2) an opportunity to exert undue influence, (3) a disposition to exert undue influence, and (4) a result indicating undue influence. Gengaro v. New Haven, 118 Conn.App. 642, 649–50, 984 A.2d 1133 (2009) (internal quotations omitted); see also Dinan v. Marchand, 279 Conn. 558, 560, fn.1 (2006).  The heirs contesting the trust argued that their mother was susceptible to undue influence because of her medical condition and fear of being placed in a nursing home.  They also alleged that one or both of the daughters who were seeking to enforce the trust were in a position to influence her because they had medical and financial control over their mother.  At least one of the two daughters, who was the oldest female in a family of eleven, had the disposition to exert such influence. Finally, they argued that the terms of the trust revealed the extent of that influence because the terms benefitted the daughters seeking to enforce the trust.  However, based on the testimony of witnesses at trial, the court concluded that the mother was not under any undue influence when she executed the trust and other testamentary documents in August 2004.

Finally, the heirs contesting the trust argued that the trust agreement was void due to their mother’s lack of capacity.  Specifically, they argued that there was evidence that their mother did not understand the terms of the trust agreement because when she later wanted to sell the contested property, she discovered that she could not. The mother had medical and neurological conditions, including a stroke in 2003 and terminal cancer in 2006; therefore, she was preoccupied with her health and was concerned about being placed in a nursing home. Furthermore, she loved all of her children and wanted them to be treated equally and fairly, but the terms of the trust are unfair to some of the beneficiaries.

Capacity to make a trust is the same as the capacity to make a will or other testamentary instrument. Connecticut statutory law generally requires that at testator be “any person eighteen years of age or older, and of sound mind.” Conn. Gen. Stat. § 45a-250.  Case law establishes the test for testamentary capacity as “whether the testator had mind and memory sound enough to know and understand the business upon which he was engaged at the time of execution.”  City National Bank and Trust Co.’s Appeal, 145 Conn. 518, 521, 144 A.2d 338 (1958).  Testamentary capacity is assessed at the time the instrument is executed, and not on the testator’s ability years later to remember the contents of the instrument.  Therefore, based on testimony from several witness at trial, the court concluded that the mother had sufficient testamentary capacity to create an enforceable inter vivos trust at the same time she created her other testamentary documents.  Furthermore, the mother’s expressed wishes were to preserve her property for her children and grandchildren; the court concluded that the trust was the most plausible legal means to carry out these wishes.

The trial court concluded that the trust was validly created and the contested real property was a trust asset.  Therefore, the unsigned copy of the trust was an expression of the intent of the mother, in her capacity as grantor, and was a valid and enforceable trust instrument.

Should you have any questions relating to trusts, estates and other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Ciccaglione v. Stewart, CV074008040, 2012 WL 671933 (Conn. Super. Ct. Feb. 8, 2012)

Where the Grantors Intend a Trust to be Modified Jointly, A Surviving Grantor May Not Make Unilateral Modifications After the Death of the Co-Grantor

Whitehouse v. Gahn, 84 A.D.3d 949  (N.Y. App. Div. 2011)

In a case before the Appellate Division of the Supreme Court of New York, a trust beneficiary appealed a New York Supreme Court decision that declared the trust amendment naming her as sole beneficiary to be void and unenforceable.  The Appellate Division affirmed the lower court ruling and remitted the case for an entry of judgment.

In their lifetimes, the mother and father, as grantors, established an irrevocable trust naming their three children as the beneficiaries of the trust estate, which consisted of the family home.  The trust instrument expressly reserved for the grantors a limited power of appointment to change or alter the remaindermen.  Approximately five months after the father died, the mother executed an amendment to the trust, naming the daughter as its sole beneficiary.  Less than one month after the amendment was executed, the mother died.  The two children who were removed as trust beneficiaries sought a declaratory judgment in the Supreme Court to declare the amendment void and unenforceable.  The court decided in their favor, and the daughter who had been named sole beneficiary appealed the decision.

According to New York case law, a trust instrument is to be construed as written and the grantor’s intent is to be determined solely from the unambiguous language of the trust instrument itself. Mercury Bay Boating Club v. San Diego Yacht Club, 557 N.E.2d 87 (N.Y. App. Ct. 1990); see Matter of Wallens, 877 N.E.2d 960 (N.Y. App. Ct. 2007); Matter of Chase Manhattan Bank, 846 N.E.2d 806 (N.Y. App. Ct. 2006).  The Appellate Division found that the terms of this trust instrument were unambiguous, and clearly expressed the grantors’ intent that their three children share the trust estate equally.  These unambiguous terms may not be altered by a separate provision of the trust which may allow the plural usage of “grantors” to be interpreted as a singular “grantor.”  The Appellate Division held that because the trust agreement allowed an amendment to be made with the joint consent of the grantors, a surviving grantor may not unilaterally amend the trust after the death of the co-grantor.  Therefore, because only the mother executed the amendment to the trust, it was void and unenforceable.

New York law permits a court to amend an irrevocable, unamendable trust if its grantor and all the beneficiaries consent to the amendment.  N.Y.  Estates, Powers and Trusts Law § 7-19.  Because that did not happen in this case, the Appellate Division found further reason to determine that the purported amendment was void and unenforceable.

The Appellate Division of the Supreme Court remitted the matter to the Supreme Court where it originated for entry of judgment declaring that the amendment to the trust was void and unenforceable, and that all three children were beneficiaries of that trust.

Should you have any questions relating to trusts, estate planning or personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Several Different Legal Theories May Allow Creditors To Reach a Debtor’s Assets Held in Trust

In a recent case before the United States District Court for the Eastern District of New York, the United States government sought to collect delinquent taxes by accessing assets held in a trust established for the benefit of the taxpayer’s children. The current case was remanded to the District Court by the United States Court of Appeals for the Second Circuit after the Second Circuit reversed an earlier District Court ruling on the same matter. On remand, the District Court ruled that the government may collect against all assets held by the trust.

Between 1978 and 1982, the taxpayer invested in a series of tax shelters that generated deductions that were later disallowed by the Internal Revenue Service (IRS).  In December 1990, after being audited, the taxpayer received notification that he owed over $227,000 in taxes and penalties.  This amount was later corrected.  In January 1992, the taxpayer received a notice of deficiency indicating that he had accrued more than $700,000 in tax liability.  The taxpayer challenged the IRS calculation of his tax liability in a petition to the United States Tax Court.  In November 1992, the Tax Court entered judgment against the taxpayer in the amount of $209,113 in taxes and penalties, and $560,000 in interest.

In June 1992, the taxpayer established a trust, naming a series of family friend and business associates as the trustees and naming his two sons as the beneficiaries.  In the same month, he transferred approximately $220,000 to the trust and in October 1992 he transferred his primary residence, valued at $515,000, to the trust.  The taxpayer received no consideration and there was no evidence the trust assumed the individual taxpayer’s mortgage obligations. Pursuant to the transfer agreement, the taxpayer was allowed to live in the residence and was responsible for the expenses of the residence, including the mortgage and property taxes.  At the time of the transfer, the mortgage was scheduled to be paid off in five years; however, the transfer agreement did not specify an end date for the taxpayer’s occupancy.

At the bench trial held in 2005, the government advanced several theories for recovering assets from the trust, all of which were rejected by the District Court. The government appealed.  In 2008, the United States Court of Appeals for the Second Circuit reversed the judgment and remanded the case.  In its remand order, the Second Circuit directed the District Court to reconsider its findings with respect to whether the conveyances by the taxpayer to the trust were actually fraudulent, whether the trust held property as the taxpayer’s nominee and whether the trust was the taxpayer’s alter ego.

According to New York law, every conveyance made with “actual intent, as distinguished from intent presumed in law, to hinder, delay or defraud” one’s creditors is fraudulent as to both present and future creditors.  N.Y. Debtor and Creditor Law § 276.  The primary issue is the intent of the debtor in making the conveyance, not the actual financial status of the debtor at the time of the conveyance.  The requisite intent required by this section does not need to be proven by direct evidence; it may be inferred from circumstances surrounding the allegedly fraudulent transfer.  Factors, known as “badges of fraud,” that a court may consider in determining fraudulent intent include: lack or inadequacy of consideration; close relationship between the transferor and the transferee; debtor’s retaining possession, benefit or use of the property; series of transactions after incurring the debt; the transferor’s knowledge of the creditor’s claim and the inability to pay it; the financial condition of the debtor before and after the transfer; and the shifting of assets to a corporation wholly owned by the debtor.  See Steinberg v. Levine, 6 A.D.3d 620 (N.Y. 2004); In re Kaiser, 722 F.2d 1574, 1582–83 (2d Cir.1983) (citations omitted).  To support a fraudulent conveyance finding, the creditor must have suffered some actual harm; however, actual harm may be found if the debtor depletes or diminishes the value of the assets of the debtor’s estate available to the creditors.  Lippe v. Bairnco Corp., 249 F.Supp.2d 357, 375 (S.D.N.Y. 2003)

The District Court found that the taxpayer was well aware of his tax liabilities and other potential demands on his assets when he transferred his residence and $220,000 to the trust in 1992.  Evidence of the taxpayer’s conduct at the time of the transfers supported the court’s finding that the taxpayer acted with the intention to hinder or delay collection of his assets. The taxpayer retained the benefits of ownership of the residence after it was transferred to the trust for no consideration.  His payments of mortgage and other property-related expenses, in lieu of rent, were the type of payments that would be made by a property owner, not a renter.  Much of the taxpayer’s net worth consisted of cash, which he was continually transferring among bank accounts held by family and close associates, as well as withdrawing to hold in an office safe. These transfers and withdrawals made it difficult for the IRS to locate and value the taxpayer’s assets.  The District Court also found that the transfers of cash and real estate to the trust unambiguously caused the requisite actual harm to his creditors by reducing the assets that the taxpayer had available to satisfy his tax debt and reducing the value of his readily accessible assets well below the amount of his tax debt.  After the transfers, the IRS would have had to collect between fifty and ninety percent of his remaining assets to satisfy his tax debt.  As a result of this analysis, the District Court found that the taxpayer’s intent to evade the IRS collection efforts was substantial and sufficient on its own; therefore, the court concluded that the taxpayer’s transfer of the residence and $220,000 to the trusts was actually fraudulent within the definition of New York law.  The remedy for fraudulent conveyance is that the creditor may collect upon the fraudulently conveyed property.  Therefore, the District Court held that the government may collect against the assets in the trust on this basis.

The nominee theory focuses on the relationship between the taxpayer and the property to determine whether a taxpayer has engaged in a legal fiction, for federal tax purposes, by placing legal title to property in the hands of another while, in actuality, retaining all or some of the benefits of being the property’s true owner. Richards v. United States, 231 B.R. 571, 578 (E.D.Pa.1999).  The overall objective of the nominee analysis is to determine whether the debor retained the practical benefits of ownership while transferring legal title.  Id. The critical consideration is whether the taxpayer exercised active or substantial control over the property.  Factors examined by the court include: (1) whether inadequate or no consideration was paid by the nominee; (2) whether the property was placed in the nominee’s name in anticipation of a liability while the transferor remains in control of the property; (3) where there is a close relationship between the nominee and the transferor; (4) whether they failed to record the conveyance; (5) whether the transferor retains possession; and (6) whether the transferor continues to enjoy the benefits of the transferred property.  Giardino v. United States, No. 96–CV–6348T, 1997 WL 1038197, at *2 (W.D.N.Y. Oct.29, 1997).  A nominee finding can be made even where there is no intent to defraud creditors or hinder collection efforts.  Where a nominee relationship is found, the government may access only the property held on the taxpayer’s behalf by the nominee and not all the property of the nominee.

The District Court found that the trust was the taxpayer’s nominee with respect to the residence only, and not with respect to the $220,000. The taxpayer had a close relationship with the trustees and the trust paid no consideration for the transfer of the residence. There was no evidence in the transfer agreement that the trust prevented the taxpayer from benefitting from the use and occupancy of the residence as much as when he held legal title to it.  The District Court found the evidence that the taxpayer made some payments relating to the property to be insufficient evidence to rebut the inference that he was the de facto owner of the property.  The payments that the taxpayer made in exchange for his occupancy were precisely those that an owner would make.  Once the mortgage was paid off, the taxpayer was only responsible for upkeep and expenses for the property; therefore, the trust received no net return from this asset.  The District Court considered that, were the trust acting as the owner of the property, it would have sought market rental rates that would have exceeded the taxpayer’s payments.  Therefore, the District Court found that the trust held the residence as the taxpayer’s nominee and that the government could recover the taxpayer’s debts against the residence under a nominee theory.

The alter ego theory differs from the nominee theory because the nominee theory focuses on the taxpayer’s control over and benefit from the actual property, while the alter ego theory emphasizes the taxpayer’s control over the entity that holds the property.  The alter ego doctrine arose from the law of corporations and allows the creditor to disregard the corporate form (also known as “piercing the corporate veil”) by either using an individual owner’s assets to satisfy a corporation’s debts or using the corporation’s assets to satisfy the individual owner’s debts.  Although the New York Court of Appeals has never held that the alter ego theory may be applied to reach assets held in trust, the District Court found no policy reason not to extend the application of veil piercing to trusts.  The policy behind piercing the corporate veil is to prevent a debtor from using the corporate form to unjustly avoid liability, which applies equally to trusts.  Therefore, the District Court held that the alter ego theory could be applied to the trust in the instant case.

To pierce the corporate veil in New York, a plaintiff must show that “(1) the owner exercised such control that the corporation has become a mere instrumentality of the owner, who is the real actor; (2) the owner used this control to commit a fraud or ‘other wrong’; and (3) the fraud or wrong results in an unjust loss or injury to the plaintiff.” Babitt v. Vebeliunas,332 F.3d 85, 91–92 (2d Cir.2003) (citations omitted); see also Wm. Passalacqua Builders, Inc. v. Resnick Developers S. Inc., 933 F.2d 131, 138 (2d Cir.1991).  With respect to analyzing the taxpayer’s control over the trust, the relevant factors can be drawn by analogy from the corporate context.  In analyzing the alter ego question as it relates to a corporation, courts consider factors such as the absence of formalities, the amount of business discretion displayed by the allegedly dominated corporation, whether the related corporations deal with the dominated corporation at arm’s length and whether the corporation in question had property that was used by other of the corporations as if it were its own. Vebeliunas,332 F.3d  at 91 n.3 (citation omitted).

The District Court that the trust was an alter ego of the taxpayer.  The trust formalities were so poorly observed as to give rise to the inference that the trust was not a bona fide independent entity. Between 1992 and 1998, the trust did not record the taxpayer’s payment of expenses for the residence as income and, during this period, the trust did not claim the mortgage interest deduction for the residence.  The individual taxpayer remained as the named beneficiary of the flood and fire insurance policies of the residence.  The accounting work for the trust was performed by a business associate of the taxpayer as a professional courtesy.  The trust tax statements were sent directly to the taxpayer instead of to the trustees. The District Court also found that the manner in which the trust was managed also demonstrate that it was an extension of the taxpayer because there was little evidence that the trustees were actively involved in managing the trust or its assets.  Having trustees play an active role in managing the trust is an important factor in deciding whether to respect the form of a trust because active involvement of trustees would support the separate existence of a trust. Dean v. United States, 987 F.Supp. 1160, 1165 (W.D.Mo.1997).  Finally, the taxpayer demonstrated his domination of the trust by controlling its property to a high degree.

Once the District Court found that the taxpayer controlled the trust, the next steps were to determine whether he used that control to commit a fraud or a wrong against the government, in its capacity as a creditor, and whether that wrong resulted in an unjust loss.  The court found these elements to be plainly satisfied by the facts and its previous findings with respect to actual fraudulent conveyance and the nominee doctrine.  Therefore, the District Court concluded that the existence of the trust as a separate entity was a legal fiction. Under the alter ego theory, the government may collect against all assets held by the trust as if they were held by the taxpayer himself.

Therefore, the District Court held that the government may proceed to collect against all the assets held by the trust that the taxpayer established for benefit of his sons in order to satisfy his delinquent tax liabilities.

Should you have any questions relating to trusts and other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

United States v. Evseroff, 00-CV-06029 KAM, 2012 WL 1514860 (E.D.N.Y. Apr. 30, 2012)

Trustees May Be Liable in their Own Person and Estate for Failure to Comply with IRS Notices of Levy Issued against Trust Beneficiaries

In a recent case before the United States District Court for the Eastern District of New York, the United States government commenced an action against a trustee in order to collect unpaid federal taxes owed by the trust beneficiary. The District Court granted the government’s summary judgment motion and found the trustee liable for unpaid federal taxes plus interest.

In 1995, the beneficiary’s mother died.  Pursuant to her will, the majority of her estate was left to be held in trust, and administered, managed, invested and reinvested by the trustee as set forth in the will.  The relevant provision of the will directed the trustee to pay her son, the sole beneficiary of the trust, at least $1,000 per month, but not more than 60-percent of the net income of the trust.  The same provision also provided the trustee with sole discretion to pay trust principal to her son as necessary for the comfortable “maintenance, support, health, education and well being” of her son, and his two sons.  In February 1996, the trustee was issued letters of trusteeship for the trust created by the will.

In April 1996, the trustee was informed by his attorney by letter that the son owed the federal government for various taxes totaling $246,579.  The attorney additionally informed the trustee that whatever income was going to the son, regardless of the source, must go first to the creditor.  In June 1996, the trustee was served with an Internal Revenue Service (IRS) Notice of Levy and Notice of Federal Tax Lien. The Notice of Levy listed federal income tax liabilities and civil penalties that the son owed to the IRS for tax years 1979 through 1989.  The notice further stated that the levy required the trustee to turn over to the IRS “this person’s property and rights to property (such as money, credits and bank deposits) that you have or which you are already obligated to pay this person.”  In either 2000 or 2001, the trustee was directed by his new attorney to make distributions from the trust to the son because the IRS had been satisfied.  The trustee did not see the paperwork documenting satisfaction of the IRS levy and signed blank checks to permit the attorney to draw on the trust account for the son.  The government then commenced action against the trustee to collect the son’s delinquent tax liability through the judicial enforcement of the IRS levy.

The IRS has two principal tools to collect delinquent taxes.  The first is a lien foreclosure suit, brought pursuant to 26 U.S.C. § 7403(a).  The other is the issuance of a levy upon all property and rights to property belonging to the delinquent taxpayer, pursuant to 26 U.S.C. § 6331(a).  Where the taxpayer’s property is being held by another, the notice of levy is customarily served upon the custodian of the property pursuant to 26 U.S.C. § 6332(a).  Serving the notice on the custodian creates a custodial relationship between the person holding the property and the IRS so that the property comes into constructive possession of the government.  If the custodian fails or refuses to surrender the property or rights to property subject to the levy, the custodian becomes liable in his own person and estate to the government in the sum equal to the value of what he failed to surrender.  26 U.S.C. § 6332(d)(1).

Pursuant to New York law, the plain language of the trust instrument must be analyzed in order to determine a trust beneficiary’s property rights in trust income or principal.  The Second Circuit has held that a beneficiary has a property interest in trust income when the trust instrument sets out the trustee’s duty to pay income in mandatory terms.  Magavern v. United States, 550 F.2d 797, 801 (2d Cir.1977).  Therefore, when the trustee is required to make a payment of trust income to a beneficiary, even when the amount and timing of the mandatory income distribution are left to the trustee’s discretion, the trust beneficiary has a property right in trust income that is subject to a tax levy.

In the instant case, because the trustee’s duty pay out a certain amount of trust income was set forth in mandatory terms, the beneficiary had a right to property in the trust income, and the government tax levy could attach to this right.  However, the will did not require the trustee to pay trust principal to the beneficiary.  The terms of the trust left decisions with respect to the trust principal entirely to the trustee’s discretion.  Therefore, the beneficiary had no attachable right to property in the trust principal until the trustee decided to make a distribution of such principal to him.  The District Court concluded that the beneficiary had some property rights to both the trust income and that portion of the trust principal, if any, that was distributed to him.  These rights to property were in the possession of the trustee, and it was undisputed under the facts of the case that the trustee did not surrender any levied property to the IRS in compliance with 26 U.S.C. § 6332(a).  Therefore, the trustee could be liable in his own person and estate to the government under 26 U.S.C. § 6332(d)(1).

A custodian of property or rights to property that are subject to an IRS levy has only two defenses to avoid liability in his own person and estate.  The first available defense is that the trustee is neither in possession of nor obligated with respect to the property or rights to property belonging to the delinquent taxpayer.  26 U.S.C. § 6332(a).  The second available defense is that the taxpayer’s property or rights to property at issue are subject to attachment or execution under a judicial process.  Id. In the instant case, the first defense was not applicable because, pursuant to the terms of the will, the trustee was both obligated to pay the beneficiary certain amounts of trust income at given intervals and empowered to make discretionary distributions.  The trustee made no suggestion that the second defense was applicable. The absence of intentional or negligent conduct is not relevant as to whether an enforcement action may be maintained against the custodian; therefore, good faith could not absolve the trustee of liability for his failure to comply with his statutory obligations to surrender property pursuant to a valid IRS Notice of Levy.  Therefore, the District Court found that the trustee could not avoid liability for his actions under either of the two statutorily available defenses.

The District Court determined that the government established as a matter of law that the trustee failed to honor the Notice of Levy served on the trust beneficiary in June 1996 by improperly distributing estate assets to the trust beneficiary after the date of the levy.  However, the court also held that the trustee was liable for less than the judgment amount requested by the government, but the court permitted the government to submit a supplemental briefing as to its entitlement to additional estate money to which the trust beneficiary had a property right.

Should you have any questions relating to trusts or other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

United States v. Michel, 08 CV 1313 DRH WDW, 2012 WL 3011124 (E.D.N.Y. July 23, 2012)

Trustees May Evict Beneficiaries from Real Property Held by the Trust

In a case before the Superior Court of Connecticut, a sister, acting in her capacity as trustee of the family trust, brought a summary process action for possession of two properties against her brother, a beneficiary of the trust, alleging that his original right or privilege to occupy the contested properties had been terminated.  The trial court entered judgment for immediate possession of the subject properties in favor of the trustee.  The Connecticut Appellate Court affirmed this ruling in a later court proceeding.

Since 2006, the contested properties had been held in trust by the family trust, which was created by the siblings’ father and funded with his assets upon his death that year.  The trust instrument named the sister as the trustee of the family trust and clearly laid out her duties.  The brother lived at the contested properties for almost his entire life, and provided physical care and support to his parents at the properties in the years before their death.  While the brother provided care for his parents, he did not pay rent to them because no rent was requested.  After his parents’ death, the brother remained in possession of the contested properties, and did not pay rent or other monies to the trust.  The trust paid all the real estate taxes, insurance bills and most utility bills for the properties.  The sister alleged that the brother engaged in negative behaviors that prevented her from properly managing the properties as trustee. Such alleged behaviors included preventing an insurance company representative from inspecting the premises, which resulted in the loss of insurance on the property, and denying her access to the properties. She also alleged that her brother was unwilling to cooperate with her relocation to a portion of the property and to conduct repairs to another portion of the property so that it could be rented out to generate income for the trust.

According to Connecticut law, Conn. Gen. Stat. § 47a-23(a)(3), the essential elements of a summary process action are: (1) the plaintiff is the owner of the property; (2) the defendant originally had a right or privilege to occupy the premises but such right or privilege has terminated; (3) the plaintiff caused proper notice to quit possession to be served on the defendant to vacate the premises on or before a certain date; and (4) although the time given the defendant to vacate in the notice to quit possession has passed, the defendant remains in possession of the premises. The general burden of proof in a civil action is on the plaintiff, who must prove all the essential elements of the cause of action by a fair preponderance of the evidence. Upon reviewing the facts of the case, the trial court determined that that the trust was the legal owner of the contested properties, the actions that the sister took related to the summary process action were within her powers as trustee, and that she had established all the remaining essential elements of her case by a fair preponderance of the evidence.

The brother asserted several special defenses related to the nature of the family trust: (1) the intent of the grantors was to allow him to remain in possession of the subject premises during his lifetime; (2) as a trust beneficiary in current possession of the premises, he is co-owner of the premises and not subject to a summary process action; (3) his beneficial interest in the trust generally equates to an equitable interest in the individual assets of the premises as part of the trust estate; and (4) a constructive trust should be imposed on the premises based on the grantor’s promise that he could remain in possession for his lifetime and his sister would be unjustly enriched if he were to be dispossessed from the premises.  Defendants have the burden of proving the allegations in their special defenses by a fair preponderance of the evidence.

According to Connecticut case law, a court’s role is to determine the meaning of what the grantor stated in the trust instrument and to not speculate upon what the grantor intended to state in the instrument. Connecticut Bank & Trust Co. v. Lyman, 148 Conn. 273, 278-79, 170 A.2d 130 (1961).  Expressed intent must control the court’s interpretation of the instrument.  Therefore, the plain language of the trust instrument itself, rather than extrinsic evidence of actual intent, is determinative of the grantors’ intent. Cooley v. Cooley, 32 Conn.App. 152, 159, cert. denied, 228 Conn. 901 (1993) (citing Heffernan v. Freedman, 177 Conn. 476, 481, 418 A.2d 895 (1979).  Because the court found nothing within the plain language of the trust supported the brother’s proposition that the grantors intended for him to remain in possession of the contested properties during his lifetime, the court found that brother failed to establish his first special defense.

Connecticut case law further establishes that the trustee holds legal title and legal ownership of the property in the trust.  Fandacone v. Fandacone, Superior Court Judicial District of New Britain, Housing Session, Docket No. NBSP-052634 (March 16, 2010, Gilligan, J.).  A beneficiary of the trust enjoys only a beneficial interest in trust assets.  Despite the beneficial or equitable interest that a beneficiary may hold in the trust estate, this does not equate to legal or equitable title to the individual assets of the trust.  Stepney Pond Estates, Ltd. v. Monroe, 260 Conn. 406, 433 n. 28 (2002). Therefore, the court found that the brother failed to establish his second and third special defenses.

A constructive trust arises where an individual who holds title to a property is subject to an equitable duty to convey it to another on the grounds that he would be unjustly enriched if he were permitted to retain the property.  See Filosi v. Hawkins, 1 Conn.App. 634, 639 (1984); Gulack v. Gulack, 30 Conn.App. 305, 311-12 (1993). A constructive trust may also be imposed to prevent the abuse of a confidential relationship. Schmaling v. Schmaling, 48 Conn.App. 1, 13, cert. denied, 244 Conn. 929 (1998). In order to find that a constructive trust exists and should be imposed, the court must first find that a special or confidential relationship existed between the parties. Id. In Connecticut, two types of confidential relationships give rise to a constructive trust: (1) where one party is under the domination of another and (2) where circumstances justify one party’s belief that the other party’s actions will be guided by his or her welfare or instructions. See Riccio v. Riccio, 75 Conn.App. 556, 559 (2003); Starzec v. Kida, 183 Conn. 41, 43 n. 1 (1981).  The court found that the brother did not establish clear and satisfactory facts from which a constructive trust may be implied. He did not establish that his sister, in her capacity as trustee, had an equitable duty to convey the contested properties to him.  The trust instrument did not dictate that the brother’s individual welfare was not the sole focus of the family trust; instead, the instrument dictated that the sister’s fiduciary duties as trustee extended to all trust beneficiaries.  The brother did not establish that his sister, in any capacity, misappropriated or attempted to misappropriate trust assets.  Finally, the brother did not establish that his sister, as an individual, would be unjustly enriched if the family trust were to regain possession of the contested properties.  The sister would still be bound by the trust instrument, and the brother would still retain his recourse to legal action to safeguard his rights as a trust beneficiary.  Therefore, the court found that the brother failed to establish his fourth special defense.

Because the court found that the sister had established the essential elements of her cause of action with a preponderance of the evidence and that the brother failed to establish any special defense, the court entered judgment for immediate possession of the subject properties in favor of the sister, acting in her capacity as the trustee of the family trust.

Should you have any questions relating to trusts, real property or personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Dudek v. Dudek, HDSP-150182, 2011 WL 767790 (Conn. Super. Ct. Feb. 9, 2011) aff’d, 136 Conn. App. 902, 44 A.3d 222 (2012)

Trusts Created For Personal Benefit Are Not Exempt From Judgment Creditors

In a case before the Superior Court of Connecticut, a judgment creditor objected to the debtor’s claim of exemption for a bank account that was standing in the name of a family living trust.  The court sustained the objection and denied the exemption.

In July 2011, a judgment was entered for Karl Estes, as the custodian of the Karl G. Estes IRA, (“judgment creditor”) against Timothy Crowley (“debtor”).  The Superior Court of Connecticut issued an execution that was served upon the bank where the debtor maintained a “High Yield Consumer Savings Account” in the name of his family living trust.  The total balance of the account was removed toward satisfying the judgment, in accordance with Conn. Gen. Stat. § 52-367b(c) (2009).  The debtor then filed a claim of exemption, classifying the account as a “private pension, trust, retirement or medical savings account” under Conn. Gen. Stat. §§ 52-321a, 52-352b(m) (2009).

According to the living trust agreement establishing the debtor’s family living trust, the debtor and his wife were both grantors and trustees of the trust.  The trust was for the benefit of the two grantors and their children. The trust was divided into two grantor’s separate shares, one for each grantor, and each share consisted of an undivided one-half beneficial interest in the trust assets. During the lives of both grantors, all distributions of income and principal from the trust estate would be made one-half from each grantor’s separate share. During their joint lifetimes, the trustees had the power to pay to or apply all or part of the principal and income of each grantor’s separate share for the benefit of each grantor. The majority of the funds in the family living trust were from an IRS refund issued in connection with the debtor and his wife’s joint federal income tax return.

Connecticut law exempts any “assets or interests of an exemptioner in, or payments received by the exemptioner from, a plan or arrangement described in Section 52-321a.” Conn. Gen. Stat. §§ 52–352b(m).  However, the statute that describes which assets are unavailable to creditors, Conn. Gen. Stat. §52–321a, limits the definition to trusts or other instruments that were established as part of retirement plans or other plans qualified under various sections of the Internal Revenue Code. Such plans are “conclusively presumed to be a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under the laws of this state.”  Id. The court found that the family living trust at issue was not a plan or arrangement described by the relevant statutes and, therefore, was not entitled to exemption from a judgment creditor on these bases.

In the alternative, the debtor argued that even if the family living trust was not entitled to exemption, the income could not be subjected to claims of creditors based on Conn. Gen. Stat. § 52-321(a).  This statute states that non-exempt income can be subject to the claims of creditors of a beneficiary only “if the property has been given to trustees to pay over the income to any person without provision for accumulation or express authorization to the trustees to withhold the income.”  The debtor argued that, given the powers of the trustees as defined in the living trust agreement, the trust income could not be subjected to the claims of creditors; therefore, the income must be exempt.

The court reached the opposite conclusion and held that the cited statute does not apply to the living trust at issue, because it was a discretionary trust established by grantors for their own benefit.  As a matter of public policy, this family living trust cannot enjoy the exemption afforded to a spendthrift trust; and as a matter of statutory interpretation, the exceptional provisions governing the liability of the income of trust find to creditors does not apply to the income of this trust. Conn. Gen. Stat. § 52–321(a). Connecticut common law has interpreted the statutory predecessor of Section 52-321(a) to mean that a trust created by a person for his own benefit cannot qualify as a “spendthrift trust” that is beyond the reach of his creditors.   See Greenwich Trust Company v. Tyson, 129 Conn. 211, 219 (1942).  The income generated by such a trust is also not protected from the just claims of creditors.  Id. at 222.

The court denied the debtor’s claim of exemption, and permitted the amount removed from the bank account standing in the name of the family living trust to be applied to the satisfaction of the judgment held by the judgment creditor.

Estes v. Crowley, FSTCV114021004S, 2011 WL 5841857 (Conn. Super. Ct. Oct. 26, 2011)

Should you have any questions relating to living trusts or other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Can I Designate Someone Other than My Spouse As the Beneficiary of my 401k in Connecticut?

Yes, you may designate someone other than your spouse as the beneficiary of your 401k without your spouse’s consent.  Essentially, anyone can be designated as the beneficiary of your 401k whom you designate.  If your spouse is listed as beneficiary and you are interested in changing this to someone else, such as your children, this can be accomplished easily by an attorney.  Perhaps you would like to make the beneficiary of your 401k a trust in the names of your children, to protect the proceeds from your spouse.  There are also tax consequences to consider.  Many options exist, and an experienced attorney can educate you on these options and help you decide the best way to proceed.

If you have any questions regarding trusts or estate planning in Connecticut, please contact Joseph C. Maya, Esq. at (203) 221-3100 or e-mail him directly at JMaya@Mayalaw.com.