Joe and Joanne Client had a revocable living trust. It was prepared many years ago by an experienced attorney. At that time, it was fully funded: their house and financial accounts had been re-titled to Joe and Joanne as trustees of their Trust.
Recently Joe and Joanne died (on different days) as the result of injuries they suffered in an auto accident. In the weeks that followed, their adult children discovered, to their dismay, that all was not well in Inheritance Land:
1. They couldn’t find the original trust or wills, only unsigned, conformed copies.
2. Mom and dad had refinanced the house, taking title out of the Trust (at the lender’s request) but never putting it back “in the Trust.”
3. Over the years, mom and dad had opened several new accounts and CD’s in their own names, as joint tenants and not as trustees of their Trust.
4. When the Trust was written, the children had been young, so Joe and Joanne had named Uncle Charlie as First Successor Trustee and the local bank as Second Successor Trustee. Charlie now has advanced dementia. The bank went belly-up last year, and no longer exists.
The children ask, “What’s going to happen? What can we do?
1. They may petition the Probate Court for an Order finding that the Trust does exist. If the original wills were not seen after the decedents’ deaths, the children will have to probate those assets under the laws of Intestate Succession.
2. Upon petition and sufficient proof, the Court may hold that although the house was removed from the Trust, the owners intended to restore title to the trustees, and therefore hold that the house be deemed to have been re-titled in the Trust.
3. If non-trust assets in the name of the last parent to die exceed $100,000 gross, there will be a probate of such assets.
4. The Court will appoint a Successor Trustee—perhaps one of the children and an administrator of any decedent’s estate.
All of this hassle could have been avoided if Joe and Joanne had reviewed their estate plan periodically, taking note of changes of circumstances—such as the maturity of the children, Charlie’s health and the bank’s demise—and been more vigilant about how they held title to their various assets.
Jerry Kessler practices law in Santa Clarita. He can be reached at 661-255-1001.