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I am repeating my post on this forum as per recommendation ~ I hope someone could help!

In trust law, would it be valid for a non-grantor to place property into the trust? Or re-stated, can only property owned by the grantor be used to fund the trust?

Also, can a beneficiary of a trust transfer property to a grantor to be placed into this trust?

If this is not the forum for this question, could someone suggest which forum would be more appropriate? Thank you!

Barbara

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If this is not the forum for this question, could someone suggest which forum would be more appropriate? A local attorney who well versed in real estate law is most appropriate for you.

You will need an attorney to complete the documents, but for some background info post on Estate Planning. Remember estate planning is NOT DIY.

I would be surprised if you can do what you want to do.

buzman
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I am repeating my post on this forum as per recommendation ~ I hope someone could help!

In trust law, would it be valid for a non-grantor to place property into the trust? Or re-stated, can only property owned by the grantor be used to fund the trust?


I see no reason why the trust cannot accept gifts. If it is a grantor trust, (still revocable), it would be a personal gift received by the grantor (in trust). If the trust is already irrevocable, it is still a gift. Once in, no getting it out!

Also, can a beneficiary of a trust transfer property to a grantor to be placed into this trust?
Again a gift is a gift. It doesn't make any difference where it came from. However, as a gift, the gifter has some tax issues. There's something wrong here in my comprehension. Generally, the grantor(s) is taxed on the trust income while revocable and therefor the grantor(s) is the current beneficiary. IF there are other beneficiaries (for current income tax purposes) the trust must have become irrevocable, and usually that is because the grantor died. How can this question be valid under those circumstances?

If this is not the forum for this question, could someone suggest which forum would be more appropriate? Thank you!

I don't think you'll find a forum for this. Anyone answering who knows the correct answer will advise you to get legal assistance. Therefor, when I answer, it is not legal, just my seat-of-the-pants guess, but I've been there. You can figure it out. Imagine that it's already happened (the beneficiary--who is also the trustee-- transferred property to his deceased spouse's irrevocable trust) before you take over as successor trustee (the bene/trustee dies). What would you do as trustee? You have 2 choices, accept the corpus, including the transferred gifts, OR, revoke the gifts and put the property back in the estate of the trustee/beneficiary. How would you complete the K-1 for this distribution if you did the second choice? When the gifts occurred may make a difference. How you can juggle the books is another consideration. As trustee do you benefit from your choice? Will anyone know what you did? Do you think a lawyer on a forum will tell you what to do? Maybe the circumstances are different form what I guessed. Tough to answer without facts. Good luck. ed
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Barbara: A problem with your post is what do you consider "property"? Land, industrial, home, cash, coins, stocks, mutual funds? whatever. The other response assumed real property, whereas I responded regarding any property. Maybe you can see we're groping in the dark because of "grantor" , "Beneficiary", and "Trustee" might be misinterpreted, or misstated by you. ed
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buzman: what thread are you resonding to with this post? ed
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Trust funding

I thought the Estate Planning Board may be of more assistance. But I know she should speak with an attorney.

buzman
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Bsybabu: "I am repeating my post on this forum as per recommendation ~ I hope someone could help!"

"In trust law, would it be valid for a non-grantor to place property into the trust? Or re-stated, can only property owned by the grantor be used to fund the trust?"

I believe that the answers are yes, and no. OTOH, why would the "non-grantor" know the terms of the trust and feel confident that the property will be used and distributed as the "non-grantor" intended?

"Also, can a beneficiary of a trust transfer property to a grantor to be placed into this trust?"

Why this raoundabout procedure? It makes my antenna arise and makes my nose sniff. Someone has already noted potential gift tax issues. OTOH, I am not sure that it is truly a gift if giving is conditioned on placing in trust for original donor. I also suspect that it will not avoid potential creditors reach for self-settled trusts.

The OP needs, IMO, to speak to an attorney in their locale versed in trust law, and not to rely on any response in these boards.

Regards, JAFO

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I appreciate everyone's input to this question - thank you so much.

JAFO, your antenna and mine did the same thing ... something about this just didn't seem quite on the up and up.

Ed, the property in this particular situation happens to be land ... I am not sure whether it is only land or if there is a house involved ... but it is real estate.

If I am not mistaken, the trust involved is a spendthrift trust. But the whole situation appears to involve much more complicated issues. We have contacted a local attorney to pursue this for the client as suggested. IRS seems to be interpreting the terms of the trust differently from the way the client believes it was actually written, and I suspect that some of the confusion comes from the trust law in two different states.

Thank you again for input ... as a professional tax advisor, it's sometimes hard to admit that you won't always have the answers!!
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