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Revocable to Irrevocable & lawsuits


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#1 carmij

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Posted 03 November 2008 - 06:24 AM

Does a living trust become irrevocable upon the death of the grantor?  Would this stop a lawsuit if the lawsuit is filed AFTER the trust has been distributed to beneficiaries? 


Here's the long story in a nutshell, my father in law passed away four days after an accident for which he was technically at fault.   He had insurance.  However--about a year AFTER the trust had been distributed to the heirs (and all creditors paid), a personal injury lawsuit was levied against the insurance company, the trust AND the beneficiaries.  We (the trust and beneficiaries) were dismissed by a judge without prejudice (or whichever 'prejudice' allows you to refile within a year).  No judgement has been made as of yet and of course they are asking for much more money than either the insurance or trust had.   Is there some way we can protect our inheritance now before they refile against us again?  Can they?  We live in Oklahoma & I've heard everything from 'you've got no problems' to 'you're screwed.'  Another opinion is appreciated.



#2 Fallen

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Posted 03 November 2008 - 06:55 AM


"Does a living trust become irrevocable upon the death of the grantor?"

Yes.


"Would this stop a lawsuit if the lawsuit is filed AFTER the trust has been distributed to beneficiaries?"

No.


"... a personal injury lawsuit was levied against the insurance company, the trust AND the beneficiaries."

I sure hope the plaintiffs were smart enough to sue his estate vs. only these mentioned parties. 


Dismissal without prejudice leaves the window open (but that doesn't mean they've legal grounds to re-file).


"No judgement has been made as of yet and of course they are asking for much more money than either the insurance or trust had."

Did the dummies not sue the estate??  Trust and estate are two different legal entities.


"Is there some way we can protect our inheritance now before they refile against us again?"

This assumes that someone will re-file.  I gather you-the successor trustee(s) haven't spoken with local legal counsel about this?


"Can they?"

Sure, but, one more time, doesn't mean they've a legal basis to do so. 


"We live in Oklahoma & I've heard everything from 'you've got no problems' to 'you're screwed.' "

If both were from attorneys, then you'd want them each to issue a detailed *written* legal opinion citing case law and statute as to why.  :)


I'll echo PG's advisory "warning" with a twist: (Many) legal issues are complicated. Explanations and comments here might not fully identify or explain the ramifications of your particular problem. I do not give legal advice as such (and such is impermissible here at any rate). Comments are based on personal knowledge and experience and legal info gleaned over a quarter century, and every state has differing laws on and avenues to address most topics.  If you need legal advice, you need to consult (and pay) a professional so that you may have someone to hold accountable.  Acting on personal and informational advice from a stranger on the internet is a bad idea -- at least not without your own thorough due dilience/research and confirmation as it applies to your situation.  :)


#3 carmij

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Posted 04 November 2008 - 01:37 AM

Thanks for the reply.  No they didn't file against his estate.  My father in law's 'estate' consisted of his car and checking account--his car was taken back by the dealer and his checking account was used to pay existing creditors (along with the money from the trust).  The only substantial money was in the trust--money he and my mother in law worked hard all their lives to save for themselves and their kids.   Yes, I am certain they will refile and I guess that's my question that no one seems to have an answer for...what are the possible 'legal rights' could they ask for and how can WE protect the inheritance BEFORE they refile again?  And if a judgement is made against us, is our home,  our own living trust and any of my husband's ongoing retirement benefits subject to garnishment should the inheritance already be spent?  (my sister in law used a large portion to pay off bills and tithe to her church).  Also, if a judgement against his insurance is NOT exceeded, can they still file against the trust and beneficiaries?   I know this is a lot, but the three attorney's we've talked to, (one the insurance attorney--who said it was time to get our own attorney, two our trust attorney (who seemed to think we had no problem), and a third who was highly recommended to do research who said we were basically 'screwed'.  I can't think there isn't something we can't do. Help.

#4 Fallen

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Posted 04 November 2008 - 05:28 AM

Not sure why we're plowing the same old ground as to what you've been told.

"No they didn't file against his estate."

That was dumb of them/their attorney; they should have sued his estate as well (can't imagine how they'd magically know whether stuff had been properly transferred from FIL or his estate to the trust, for one thing ... and the insurance company presumably didn't insure the trust but the FIL as an individual).  It's also not clear why the trustee would use *any* trust assets to pay his estate debt.

 

"... what are the possible 'legal rights' could they ask for and how can WE protect the inheritance BEFORE they refile again?"

Not sure what you mean by "legal rights could they ask for" but, one more time, the executor of the estate and the trustee(s) (if different people -- that's unlikely) should be seeking written legal opinions from local counsel on this.  We have zippy information to go by, never mind you may not receive legal advice here (and the biggest issue of all, we're complete strangers who only know what you tell us).   

 

"And if a judgement is made against us, is our home,  our own living trust and any of my husband's ongoing retirement benefits subject to garnishment should the inheritance already be spent?"

Retirement accounts in general aren't assets subject to "garnishment"/seizure.  You need to seek local counsel.   

 

"Also, if a judgement against his insurance is NOT exceeded, can they still file against the trust and beneficiaries?"

Anything *can* happen; whether it will or not depends on particulars we don't know.

No one should be talking with the insurance company attorney aside from perhaps the executor of the estate; everyone else should be consulting their own attorney.  

"... and a third who was highly recommended to do research who said we were basically 'screwed'."

One more time, the interested parties (trustees, individuals) should get a *written* legal opinion from the relevant attorneys.

I'll echo PG's advisory "warning" with a twist: (Many) legal issues are complicated. Explanations and comments here might not fully identify or explain the ramifications of your particular problem. I do not give legal advice as such (and such is impermissible here at any rate). Comments are based on personal knowledge and experience and legal info gleaned over a quarter century, and every state has differing laws on and avenues to address most topics.  If you need legal advice, you need to consult (and pay) a professional so that you may have someone to hold accountable.  Acting on personal and informational advice from a stranger on the internet is a bad idea -- at least not without your own thorough due dilience/research and confirmation as it applies to your situation.  :)





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