Pitfalls, Pratfalls and Shortfalls

Mom and Dad had a revocable living trust, 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 Mom and Dad as trustees of their Trust.
Recently Mom and Dad 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 in their own names (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 Mom and Dad had named Uncle Charlie as First Successor
Trustee and the local bank as Second Successor Trustee. Charlie now has advanced dementia. The bank folded 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.
2. Upon sufficient proof, the Court may find 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. The Court will appoint a Successor Trustee and an administrator of any decedent’s estate — perhaps one of the children.
4. If non-trust assets in the name of the last parent to die exceed $150,000 gross, there will be a probate of such assets. If no will can be found or proved, such assets will be distributed under the law of intestate succession.
All of this hassle could have been avoided if Mom and Dad 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.