Monthly Archives: June 2016

“You don’t need to fund your trust.” Said no good lawyer, ever.

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A Trust Needs to Be Funded To Be Valid

I was reading my parent’s trust documents recently.  I called my dad up and asked him a few questions about the process he went through. That’s another post for another time. I would like to tell you that he paid big bucks for a trust to be formed. At the time, his houses were put in the trust. Since then, he has sold both and moved, AND acquired a rental house.

None of the new properties are in the trust. He asked his lawyer about it and was told not to worry about it. The pourover will catches all that property and puts it into the trust.

And it does.

AFTER IT GOES THROUGH PROBATE.

One of the biggest reasons to form a trust in the first place is to avoid probate! We are both wondering why the lawyer would say this.

Perhaps they are thinking of a Heggstad** petition, based on the case by the same name (probate Code 850). If your trust includes a list of assets you want in the trust, along with a statement of conveyance, your heirs can petition the court to have those assets included in the trust.  Or, maybe they are thinking of the 2015 update to this idea of “I forgot to fund my trust” with the Ukkestad case *** where the court ruled that specific language in the trust could be a substitute for actual titling the property in the name of the trust. A simple provision stating something to the effect of “all my real property” in just the right place of the trust will suffice.

Both of these remedies to an unfunded trust avoids a full probate. But it still goes through the courts, which is what we are trying to avoid. Your heirs will be dealing with the grief of your absence: they shouldn’t have to deal with grief from the courts.

You MUST title your property in the name of your trust if you want to avoid probate and the courts. It’s as simple as filing a grant deed with the recorder’s office. Is it a pain to drive downtown after you sign the paper in front of a notary?

Yes. (For the record, if I prepare your trust for you, I take the deeds downtown for you.)

But, it is far worse for your heirs to drive downtown to file for probate, which is expensive and takes months (sometimes years) on end. Probate can cost thousands, even tens of thousands of dollars. Yikes. Even if they are granted a shortened probate process with a Heggstad petition, that is still time and money spent with the courts.

Do yourself and your heirs a favor: look through your trust documents and make sure your assets are in the trust. If someone says, “Don’t worry about putting those in the trust. The will catches it all.” Run. Run away and go straight to the recorder’s office with a notarized grant deed in hand.

Fund that trust.

** Estate of Heggstad, 16 Ca4th 943, 20 CR2d 433 (1993)

***Ukkestad v RBS Asset Finance,  235 Cal.App.4th 156 (2015)

 

 

A Revocable Living Trust: What is it?

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A Revocable Living Trust: What is it?

A revocable living trust is both simple and confusing at the same time.

It can take a while to wrap your head around it. It probably doesn’t help when you see a trust full of really big words and complex paragraphs. Trusts are boring to read, and trusts seem like something only rich people do.

You know, like in the movies? Or perhaps you’ve met someone who was a trust fund kid?

If your estate is like mine (and most the people I know), and you want to avoid the probate process, I can help you.  If you own a home and have a few assets like a life insurance policy, a retirement fund, and maybe a couple of cars or toys, then a revocable living trust can be one tool in your estate plan that will save your family time and money by avoiding the probate process.

A Trust Is…

A revocable living trust is a tool. A proper estate plan is like Batman’s utility belt. Lots of different gadgets and tools are on that belt, and each one has a different function to help Batman in a time of need.

A revocable living trust is one of those tools in your estate planning “utility belt.” (There are other tools as well.) It’s made of paper and words, but it is a tool that is legally recognized as a way to help a person or a family preserve their property. We all work hard. We deserve the right to be able to take care of our property and keep the courts and prying eyes out of our business.

A trust can do that.

A trust is a private document. It allows you to stay out of the courts and keep your hard earned property yours. A revocable living trust is one type of tool that allows this, and it might be right for you if:

  • You would like to avoid probate, AND
  • You would like to keep your assets out of the reach of possible MediCal recovery, AND
  • You want to maintain control over all your property and assets while you are alive, AND
  • You can name successors who are responsible and willing to follow the trust documents when you are no longer able to do so yourself.

I like to tell my clients that a trust is like a treasure chest. The trust documents build the chest, and your “stuff” is the treasure inside it. While you are living, you have complete control over the chest, and the treasure inside it. You can change the contents, and you can even change the structure of the chest. Once you pass away, however, the chest is no longer changeable, and your successor trustee must now follow your instructions on what to do with the chest, and how to manage your treasures inside.

How It Works

If you think you need a revocable living trust, you and I will work together to determine if a trust will serve your needs, and if yes, what you would like your trust to say. A trust can be formed whether you are single or married, and if you are married, you may choose to come in singly or together with your spouse.

We will discuss your financial situation in as much detail that allows me to advise you properly. At this point, you will have attorney-client privilege, so this information stays confidential. We will also talk about what you envision for the future at certain time periods: 10 years from now, 20 years, etc. This helps us both know what is important to you so your estate plan can reflect your values.

After we dive in and talk about your assets, liabilities, your values, and your family, I will be ready to draft your documents, and your RLT will be one of those documents.** You will be one giant step closer to having a plan in place, and the peace of mind that comes from that is priceless for both you and your family.

**There are other documents you need for a fully formed estate plan. When you form your revocable living trust with me, those other documents are included in your plan. These include wills, powers of attorney, advanced healthcare directives, HIPAA forms, and other documents to get you organized and ready for the future.

Why do I Need an Estate Plan?

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Most people I know don’t think they need an estate plan.

“The kids can take care of it after I’m gone.”

“It’s too expensive.”

“I want one, but I don’t know where to start.”

“I don’t have the time. I keep forgetting.”

I’m with you on this. Once upon a time, after the birth of our fourth child and an anticipated weekend away without kids for our anniversary, I was spurred into action. (Probably by postpartum hormones.) Regardless of the catalyst, I was panicked and felt like we needed a plan in case we died in a car accident and grandma had the kids. I didn’t have the time or the money to hire anyone.

I printed out the free statutory will form from the California Bar Association website, one for myself and one for my husband. It allowed us to name a guardian for our children and an executor to take care of the finances. That was 7 years ago, and I still have those forms.

It’s time for an upgrade. Since finishing law school and watching the last of my grandparents pass away, I now know exactly why I need an estate plan. I currently don’t have much of an “estate” to speak of. It consists of a house, a couple of cars, and a bank account that always seems to run low.

But in the last few years, I’ve watched how my own family handled with ease the property of my grandparents after their passing. It was such a benefit to the generation above me: they were able to avoid probate (and those enormous probate fees) and obtain a leg up in financial terms.

Every family has wealth. By proper financial and estate planning, that wealth can be preserved and handed down to future generations. And, if you are like me and sometimes imagine the worst case scenario of an early death and leaving behind children, then an estate plan can ease your mind and make sure your children are taken care of.

It’s easy to put off for another day. Totally easy to say, “I’ll get to that later.”

I am getting my estate in order. No more putting it off.

It’s time.

Is it time for you, too?