Kosher Revocable Trusts: The Jerusalem Trust Form

by Jonathan Porat (copyright © 1998)

Passing an estate on to heirs can be very expensive, in estate taxes and in legal fees associated with probate. Many Americans have prepared revocable trusts to avoid probate and estate taxes.

For thousands of years Jewish people have prepared revocable trusts, to avoid non-rabbinic courts and, most often, to provide special funds for family members, usually a son-in-law involved in rabbinical learning.

Thus the revocable trust is an important legal form in Jewish law. The revocable trust is called in Hebrew "matanass boree" and has several requirements beyond the common law trust. A sample revocable trust, written by the author is appended as an example of a kosher revocable trust. "Do-it-yourself" common law trust forms found in bookstores may not be totally kosher as a first choice, given better alternatives. However, they are probably binding in halachah, and do not clearly defy halachah In contrast, a standard Will alone is not a kosher first choice, to say the least. The dayan harav Yhshai Grunfeld, ztz"l was more pointed:

"...in Jewish law we have the rules ..There is no gift after death and...There is no effective document after death. Moreover, at the moment of death, the Jewish Law of Inheritance becomes operative and the estate, as far as Jewish law is concerned, is transferred to those who are the heirs in accordance with the Jewish Law of Inheritance....The logical consequence of this is that any money in the hands of a beneficiary of a will under the law of the land which, as far as Jewish religious law is concerned, belongs to a different person, namely the proper heir in accordance with the Jewish Law of Inheritance, has to be returned to that heir." Grunfeld, The Jewish Law of Inheritance, pp.53-55.

Of course, the burden of proof is on the plaintiff, with plausible arguments to be made the other way, leaving the matter in enough doubt. that a beis din can justifiably withhold their hand. Thus we don't need to worry about ami aretz rushing to beis din in vain attempts to reclaim their long-lost inheritances after the fact. That's grist for a Purim shpiel However, in frank discussion avoidance of dispute actually requires sharpening our learning and that of our fellow lawyers. The custom of unlearned people should be to learn the customs of the learned. I don't know of any learned rabbanim depending on a Will alone. We may not be full time talmud scholars but we are practical lawyers who realize that what we do for our clients in the way of kashrut is almost always all that will be done. The "Jewish Law" (JLaw.com) website is a jewel because we don't all have the time to go to the local kollel, or even to the seforim bookstore for a book or a form. However, when the question is in front of us we have enough concern for the law to look for a straight answer on what is kosher.for our Jewish clients.

The off-the-cuff opinions expressed here are those of a Jewish youthfully-retired lawyer who was more than once requested to provide a kosher trust that American lawyers and American courts would accept. I couldn't find a form like that among the several forms that I found, so I wrote one that is, bs"d, kosher and practical. Although the halachic rules were checked with the help of Kollel members, and American forms were used for common law requirements, the important requirement, ensuring that the trust was motivated by the right intent, was done by the requesting rabbis. From the author's experience while conferring with clients, other lawyers and rabbis, ensuring a kosher intent should be left to the rabbis.

Footnotes have not been included. I have a file of other available English forms, and my own translations. If there is enough interest it may be worthwhile to edit some kind of composite form, with sources and alternatives for the standard components and footnotes. In any case, credit must be given to Dayan I. Grunfeld, ztz"l for his book "The Jewish Law of Inheritance" (Feldheim) which provides the example of a great Torah sage writing his last work for his own personal use. His book is worth reading for its value as an example of torah learning on the cutting edge, sincere and spontaneous.

BRIEFLY EXPLAINED

The Jerusalem Trust is a revocable trust used for bequests that are halachically proper. It may be used by an attorney, with an orthodox rabbi, to provide a kosher bequest that avoids probate, and may be modified easily to avoid estate taxes.

THE BEQUEST TRUST

A bequest trust is called in Hebrew Matanoss Boree, a gift while healthy, indicating that the trust resulted from careful, optimistic planning and not a last minute improvisation. The kosher bequest trust is made for purposes that take discretionary precedence over and/or support the family structure which is the basis of inheritance. Some purposes, such as specifically to disinherit someone, are not kosher intents. However, specifically to give to someone who would otherwise not receive is usually a kosher intent, even if the usual heirs are mostly supplanted. An orthodox rabbi must be consulted, since subtleties are involved that require personal consultation.

COMMON LAW

The kosher bequest trust is closely paralleled in common law by the revocable trust. Almost complete unity of form is possible, one trust satisfying courts of each jurisdiction. Both courts should be able to read the whole document with comprehension, even though the trust will hopefully need no review by either. The proffered "JERUSALEM TRUST" is an example and proposal for a form without eccentric language or difficult translations. The Jerusalem Trust is named in order to remember Jerusalem for those owning property outside the land of Israel. The sample trust is NOT intended for use in the Land of Israel, NOR FOR PROPERTY LOCATED IN the Land of Israel, where common law is not applicable. Trust forms for use in the Land of Israel are available, for example, in the book by the Rabbinical Judge Rav Ezra Basri (shleet"a), "I Hereby Bequeath" (HaKtav Institute,P.O.B. 6040, Jerusalem). The Jerusalem Trust is intended for common law regimes. It is not a do it yourself form. Such forms are available at your local bookstore but are not likely to be a kosher first choice.

SUMMARY OF THE SAMPLE JERUSALEM TRUST DOCUMENT

The major points of a kosher bequest trust are: Kosher Intent, Revocability, Public Notice, Use of Local Transfer Rules ONLY OUTSIDE the Land of Israel, Supplemental Debt Bequest, and Arbitration Clause.

KOSHER INTENT

A trust bequest should not, of course, be made out of disregard for the purpose of Torah inheritance law, nor even from well-based negative judgment about an heir. Rather the trust should be motivated by affirmative desire to benefit the named beneficiaries, without rancor toward passed over heirs. Certainly an invalid intent should not be stated in the document. But even a well written document cannot supplant a personal factual judgment by a well-qualified and respected orthodox rabbi. Usually a passed over heir should not be left with absolutely nothing, and such a result might bring the trust into question. In any case, call a local orthodox rabbi, to ensure kosher intent as well as to do a classic halachic transfer (strongly recommended in all cases), and to bring a bracha.

REVOCABILITY

The trust should not open the possibility the Grantor might make a subsequent invalid transfer. No technical impediments should be allowed which might cause deception, for instance in subsequent marriage by the grantor, whose prospective spouse was not aware of a previously executed trust.

PUBLIC NOTICE

Any irrevocable transfer must immediately be made a fact of public knowledge. All parties and witnesses and bystanders must be told formally that they are free to discuss all irrevocable transfers in public.

LOCAL TRANSFER ONLY OUTSIDE THE LAND OF ISRAEL

Local forms of transfer may be substituted for classic transfer requirements ONLY OUTSIDE the Land of Israel. Where all parties, property and transfers take place outside Eretz Israel, local transfer conventions are sufficient. However, a classic halachic transfer takes only a few minutes and, together with rabbinic supervision will ensure that the arrangement is respected, even given frequent confusion about when such a transfer is and is not required.

SUPPLEMENTAL DEBT BEQUEST

A revocable trust is halachicly valid because it is a present transfer during the giver's lifetime, with actually delivery subject to lifetime revocation. The gift is specified and a revocable title is delivered to and held in trust by a third party, to be delivered only if the gift is not revoked during the giverĘs lifetime. Thus, a revocable trust is enough if all property transfers are completed. However, sometimes transfers are not completed, which is the reason a "pour-over Will" is appended to revocable trusts in American law practice. Since Wills are not halachicly valid according to most scholars (See Grunfeld, "The Jewish Law of Inheritance" (Feldheim) a parallel document is provided by halachic authorities. Called "hhetzie zaccar" , "half-sonĘs-share" named apparently from the usual purpose to implement a promised share to a son-in-law. The form is an admission of debt collectible from the estate. Debts like the half-son's-share, arguably incurred without consideration, may not have any local transfer rules, so the classic halachic transfer is arguably necessary for this even outside the Land of Israel.

ARBITRATION CLAUSE

Local conventions of property transfer can supplant the classic halachic transfer only outside the Land of Israel, and local property law is accepted only as far as required to support local authorities. For everything beyond that limit, arbitration is required to the maximum extent tolerated under local law.

PROPERTY TRANSFERS UNDER THE TRUST

Like all trust agreements, revocable trusts agreements do not substitute for the title transfers themselves, which must be done before the trust applies to any particular piece of property. The trust agreement provides the basis for naming a trustee in a title. For instance the title states"...held under Trust Agreement ________, dated _________..." Thus the trustee cannot do anything with the property without showing the trust agreement, and the grantor can revoke the title according to the trust agreement's terms. Lawyers' libraries, bank offices and even popular bookstores are full of American law revocable trusts, to which the kosher requirements usually may be appended easily.

The proffered "JERUSALEM TRUST" is an example and proposal for a form. Constructive feedback and suggestions will be appreciated.

THE JERUSALEM TRUST

1 ) I, _______________________________ (hereinafter sometimes referred to as "Grantor"), currently residing at____________________________________________, am the sole owner of the following articles of personal property:__________________________________________. In order to provide an orderly succession of ownership for said property in adherence to the Torah Law of Israel, and in order to ensure that Beneficiaries named hereunder may accept distributions provided under terms of this Trust in accordance with the strictest application of the Torah Law of Israel, under terms of this Trust, to be known as the "___________________ Trust Agreement, dated________________________________" I hereby transfer said property in trust to_________________________(hereinafter sometimes referred to as "Trustee"), currently residing at_______________________________________.

2 ) Subject to revocation by Grantor at any time before his death, this Trust Agreement and all pursuant Declarations of Trust and/or deed transactions transferring real or movable property to the trustees named herein and/or recording real or movable property under the names of trustees named herein effect transfers of property according to the law of the State of ____________ and other States of the United States and according to regulatory and common law applicable to or applied by United States Government agencies and by courts and agencies of other governments and according to the Torah law of Israel.

3) Grantor may absolutely or partially alienate from Trustee all or part of property held under terms of this trust by assignment in Grantor's own name executed before his demise to any party, including by gift, sale, easement, mortgage or any other transfer of property right executed before Grantor's demise. Further, if the Grantor revokes this Trust Agreement or any or all or part of any of the transfers pursuant to this Trust Agreement, at any time before Grantor's demise, then in that case the property subject to such revocation reverts immediately and automatically to the unfettered ownership of Grantor and/or his assigns. If this trust poses any impediment to an otherwise valid lifetime transfer by Grantor, Trustee will expedite the transfer by any reasonable means in the interest of the transferee. If Grantor, during his lifetime, either in his own right or acting as Trustee, leases, mortgages, grants an easement or temporarily or conditionally alienates, subordinates or otherwise reduces his ownership or rights over all or part of the trust property, including as part of a prenuptial or other agreement under the Torah law of Israel, then that act has its full effect in regard to the subject property, without regard to this trust.

4 ) Trustee and any witnesses to this Trust Agreement are hereby instructed to treat any irrevocable transfers as a fact of public knowledge.

5 ) This deed of trust cannot be revoked or amended by Grantor's Will and any property held under this trust at the time of Grantor's demise may not be assigned, controlled or impinged other than according to the terms of this trust. Trustee may accept additional property designated in Grantor's Will to be held under terms of this trust. To the extent that such requirements can be waived, the Trustee and any Successor Trustee shall not be required to qualify before, be appointed by, or account to any court, or to obtain the order or approval of any court with respect to the exercise of any power or discretion granted to the Trustee by the terms of this trust.

6 ) The following section regards only the Torah law of Israel, with the intent of establishing that Beneficiaries of this trust have a counterclaim under the Torah law of Israel superior to any contrary inheritance claims that may arise under that law. If and to the proportion that Grantor has not revoked this trust before his demise, and on the condition that his heirs under the Torah law of Israel make any claims contrary to the terms of this Trust Agreement, Grantor hereby admits his debt and hereby obligates himself to pay to trust Beneficiaries under terms identical to the terms of this trust, the sum of $______________ Dollars American, as a guarantee for the renunciation of all contrary claims over trust property. Subject to revocation of this trust in whole or in part, if contrary claims are made on trust property Grantor owes said amount to all the trust Beneficiaries together, each Beneficiary having an individual claim in the same proportion as his beneficial interest in this trust. If no contrary claims are made to trust property then delivery of trust property to beneficiaries satisfies Grantor's debt. In addition to signing this Trust Agreement, Grantor and Trustee agree to implement all obligations described herein by an act of transfer valid under the Torah law of Israel for this purpose. This section does not affect instructions under other law and is itself enforceable only before a rabbinic court of the Torah law of Israel.

7 ) Beneficial use and distribution of trust property is on the following terms:_______________...

8 ) A Successor Trustee may replace Trustee by Grantor's appointment or, only after Grantor's demise, by appointment by those Beneficiaries whose sum interests comprise a majority share of both the current and the remainder interests in trust property.

9 ) After the demise of Grantor, at the death of the second to last living beneficiary of all beneficiaries living at the time of GrantorĘs demise, the then-acting Trustee shall distribute all remaining trust assets, regardless of any other terms or conditions contained in this trust.

10 ) If any clause, wording, term or condition of this Trust Agreement is held to be invalid by any court or agency, the remaining portions shall remain effective.

11 ) All interests of a Beneficiary hereunder shall be inalienable and free from anticipation, assignment, attachment, pledge or control by the creditors or a present or former spouse of any Beneficiary in any proceedings at law or in equity.

12 ) Grantor reserves the right of revocation of this Trust Agreement in whole or in part, and the reduction of trust property by his own sale or disposition of said property, without consent of, or notice to, Beneficiaries.

13 ) Grantor and Trustee hereby agree to the terms and obligations of this Trust Agreement and further agree to implement this Trust Agreement by act or acts of property transfer appropriate to property under the jurisdiction, control or possession of any government, court or private agency. Both parties agree that in all matters regarding this agreement or transactions pertaining to it, no plea will be made to any civil court of any nation or jurisdiction, except at the instruction of the Council of Orthodox Rabbis nearest the locality where the claim arises. Any questions or disagreements, Trustee will resolve privately or in private arbitration according to the Torah law of Israel..

Jonathan Porat currently resides in Israel. He welcomes comments on this article and the "Jerusalem Trust" Form and may be contacted via e-mail at jerusalemtrust@yahoo.com.