Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 16, 1994 TAG: 9405170037
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
Is there any way a trust can be broken? Also, can a bank use this trust principal or interest at its own discretion for purposes of their choosing?
A: Trusts can be expensive and complicated to create and operate. They are favored primarily for people who have a lot of money and large estates subject to estate taxes. They also are used by people who have special needs, such as caring for a disabled or spendthrift dependent. Many people set up trusts for themselves during their lifetime so that their affairs can be handled in case they become incapacitated.
The beneficiary of a trust need not be a business person or responsible. Many beneficiaries are very young children. But the trustee must be competent and reliable. Very often people use a bank as trustee.
Neil V. Birkhoff, a specialist in trusts and estates for the Roanoke law firm of Woods, Rogers and Hazlegrove, said it is difficult to break the terms of a trust.
Anyone seeking to set aside the terms must petition a court and prove a good reason for the action, Birkhoff said. Every heir and potential beneficiary must be brought before the court; even unborn children must be represented by a legal guardian.
Even after all these precautions, Birkhoff said, he has found courts reluctant to tamper with the terms of a trust. The person seeking to change a trust must prove that the terms are uneconomical or too difficult to administer.
Birkhoff said banks are required by law to follow the terms of a trust. You yourself would set the terms for the bank when you draw up the documents. You can word the papers to give the bank great discretion in handling the money, or you can design a tightly controlled trust.
He has found that bank trust officers work closely with beneficiaries within the terms of the trust documents. They are not adversaries in handling the trust.
If you are interested in creating a trust, you should see a lawyer and discuss your needs.
Tax-free gift limit: $10,000 per person
Q: I would like to give our children $10,000, and my husband would like to give $10,000, which would be a total of $20,000 for each child. What form would I have to file with the Internal Revenue Service? Do the children have to add the amount to their income tax?
A: Any person can give another person up to $10,000 each year without any tax ramifications. Thus, you and your husband can each give $10,000 - or $20,000 between you - to each of your children. You do not have to file any gift tax return as long as your gift is within this annual limit. Your children need not pay income tax on this gift.
Money may have gone unclaimed
Q: I inherited from my mother two automatically renewable certificates of investment from Roanoke Industrial Loan and Thrift. One was for $2,000 dated Feb. 5, 1973, for one year at 6 percent. The other for $2,500 was dated July 20, 1973, for five years at 8 percent. Do these have any value? If so, how do I redeem them? My investigation shows Roanoke Industrial Loan and Thrift is an ancestor of NationsBank.
A: Your investigation is correct. Roanoke Industrial Loan and Thrift failed and was taken over by Mountain Trust Bank. The latter merged with Virginia National Bank, which later became Sovran and then C&S/Sovran. In still another merger in the series, the last named became NationsBank.
Karen Colaw, a spokeswoman for the bank, said her efforts turned up the fact that Mountain Trust called in all deposits from Roanoke Industrial Loan and Thrift and paid them off. No deposits earned interest after the failure.
Unfortunately, the bank doesn't keep records more than seven years old, the period required by law.
After that time, the bank must by law turn over any unclaimed money to the state. The number of the Virginia office of unclaimed property is (800) 468-1088. You should check the records there to determine whether your mother's name is listed.
Colaw said it is possible that some depositors, and perhaps your mother, signed affidavits that they had misplaced their certificates. They would thus have received their money at the time the certificates were redeemed. Or perhaps your mother did not answer the redemption call and the money went to the state as an unclaimed deposit.
by CNB