Estate lawyers weigh in on 'irrevocable' trusts

Estate lawyers weigh in on 'irrevocable' trusts

NEW ORLEANS, LA (WVUE) - The battle between the Bensons revolves around the “irrevocable trusts” his daughter and grandchildren say he created for them. And some local experts on estate planning were asked for their opinions on whether an irrevocable trust can be revoked.

According to Merriam Webster Dictionary the word "irrevocable" means, "not possible to revoke; unalterable."

"Yes, in theory, no, in practice, which is a very common legal answer," said attorney John Clayton Butler who spends his days handling estates. "Theoretically, irrevocable trusts should be irrevocable, you should not be able to get the assets back out."

Max Nathan, who authored the state's law on trusts, wills and successions, said whether an irrevocable trust can be revoked is not always cut and dry as the definition of the word implies.

"There are dozens of grounds you can revoke an irrevocable trust…there are special provisions in the Louisiana trust code that say if the trust can no longer serve the purpose for which it was originally established, then a court can have authority to modify or terminate the trust. So even though you said it was irrevocable that just means I can't, on my own, voluntarily terminate the trust or revoke it, but it might be ordered to be revoked for good cause," he said.

Neither Butler or Nathan is involved in the Benson family matter.

"There are some complex procedures that are available to try and what we call 'claw back' the assets from a trust. That being said, there is virtually no way to do it tax-free," said Butler.

But Nathan said taxes are not always a consequence of breaking a trust.

"If a trustee sells property there could be tax liability. But if you just terminate the trust and distribute, there may or may not be depending on the basis for which it was terminated and to whom it went," said Nathan.

Renee Benson and her children Rita and Ryan filed a lawsuit this week alleging that Tom Benson is unable to make reasoned decisions regarding his own care and his property. The lawsuit said that in 2009 Mr. Benson created irrevocable trusts for their sole benefit, and that Benson transferred to those trusts substantial portions of family interests, including majority interests in the Saints and Pelicans franchises.

"My clients are committed to New Orleans and to these teams and they're the ones that have been involved in the dealerships, and all the management of the Benson family interests. And they're the ones these assets have been in trusts for them for years," said attorney Randy Smith who is representing Benson's daughter and grandchildren in the legal battle.

"The problem that a lot of people have with trusts, a lot of my clients have with trusts, is that a lot of times trusts are set up in peace, in peace time. In other words no one's fighting, everybody loves each other," said Butler.

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