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WHEN ARE YOU ENTITLED TO A COPY OF A TRUST?

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A beneficiary or heir doesn’t automatically get a copy of a trust. Each beneficiary and heir is entitled to notice when a trust settlor dies and/or there is a change of trustee. Once the beneficiary or heir asks, in writing, for a copy of the trust then the trustee must provide a copy of the trust and all of its amendments within sixty days.

Once those sixty days have run, the beneficiary can petition the probate court to compel the trustee to provide a copy of the trust and its amendments. The beneficiary can also ask for attorney’s fees and court costs for having to file the petition. California law does not put any cap on the attorney’s fees and costs. This means the longer the trustee fights to be provided a copy of the trust, the more it will cost the trustee when he or she loses. Whatever amount the court awards for fees and costs is payable by the trustee personally. The trustee can’t use trust funds to pay.

The trust instrument determines the nature and scope of a trustee’s duty to account and report [Prob. Code §§ 16061, 16062]. The trust instrument may expand, restrict, or waive the duty to account and report, subject to certain restrictions. It is important to note that although the trust instrument may waive a trustee’s general duty to account when the trustee is not a disqualified person, a trustee nonetheless may be compelled to account “upon a showing that it is reasonably likely that a material breach of the trust has occurred” [Prob. Code § 16064(a)]. As such, a trustee cannot rely upon exculpatory language in the trust instrument to refuse to account to a beneficiary.

If you have cause for an Elder Abuse claim, you may file a Petition to Remove the trustee and/or ask for an accounting of the Trust. Otherwise, the first task the practitioner must undertake when representing a beneficiary is to review the trust instrument to determine whether the trustee owes a general duty to account or report, as well as the scope of that duty.

WFB Legal Consulting, Inc.–A BEST ASSET PROTECTION Services Group–Lawyer for Business

TRANSFERRING ASSETS INTO A LIVING TRUST

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CHANGING OWNERSHIP TO THE TRUST

When you transfer assets into a living trust you are changing legal ownership of your assets from your name to that of the trust. Most people create a living trust with themselves as trustee, so you will still be able to use and control your assets, but they will technically be owned by the trust. When funding a living trust, ownership will be transferred from you to (Your Name), Trustee of the (Your Name) Living Trust. Note that items in the trust will continue to use your Social Security number. Make a complete list of the assets you want to transfer so that you are sure you don’t leave anything out.

TRANSFERRING REAL PROPERTY TO YOUR TRUST

One of the largest assets most people own is their home and this is likely an asset you want to be sure to transfer into your trust. You can transfer your home (or any real property) to the trust with a deed transfer, a document that transfers ownership to the trust. A quitclaim deed is the simplest method, however a warranty deed may be preferred, since it ensures you have good title when you transfer it and makes it easier for your trust beneficiaries to sell at a later time. You will want to check with an attorney about which type of deed is best in your situation. Once the deed is prepared, a real estate deed transfer must be filed with your county and you will likely need to pay a filing fee.

A deed transfer should not affect your mortgage, even if you have a due on sale provision. You should check with your title insurance (if you have any). You may be able to simply transfer it to the trust, or your title insurance company may require that the trust buy a new policy. Once the deed is transferred, you will need to change your homeowner’s insurance to indicate the trust as owner of the property. If you receive a real estate tax exemption, you will want to make sure that is transferred and you may need to show documentation of the trust to the taxing authority, such as a certificate of trust (a document your attorney can create that certifies the existence of the trust).

DRIVE THE CHANGES HOME

If you would like to transfer ownership of your car or truck to your trust, you need to first determine if your state will allow a trust to hold ownership of a vehicle (check the DMV web site or consult your attorney). You also should call your insurance company to be certain they will continue coverage once the transfer is made. To transfer ownership, you will need to obtain a title change form from your DMV and complete it, naming the trustee (as trustee of your trust) as new owner. Sales tax should not apply to the transfer. If the clerk tries to apply it, you may need to speak to a supervisor. Note that owning a vehicle in the name of a trust can be detrimental if you are in an accident. The other person may assume you are wealthy if they realize your car is owned by a trust and sue. If you own a boat, you will need to follow a similar procedure to transfer title.

BIG FINANCE

To transfer assets such as investments, bank accounts, or stock to your living trust, you will need to contact the institution and complete a form. You will likely need to provide a certificate of trust as well. You may want to keep your personal checking and savings account out of the trust for ease of use.

OTHER PERSONAL PROPERTY

You likely own many things that you don’t have actual written titles or ownership documents for, such as jewelry, furniture, collectibles, and the miscellaneous things that fill your home. To place them in your living trust fund, you can name them in your trust document on a property schedule (basically a list you attach to the trust document that is referred to in the document) and indicate that their ownership is being transferred to the trust. If any of these items are insured, be sure to transfer the insurance to the name of the trust.

ITEMS NOT TO BE TRUSTED

There are some things that cannot or should not be placed in your trust. Individual Retirement Accounts (IRAs) cannot be owned by a trust, so these must remain in your own name. In some states life insurance policies cannot be owned by a trust, and if it is allowed it generally is not advisable since it may make the benefits taxable.

COVERING ALL YOUR BASES

If you purchase or inherit items after you create the trust, you will need to transfer those items to the trust as soon as possible. If possible, when you purchase items, purchase them as trustee of the trust so they are automatically placed in the trust. To further protect yourself, you will want a pour over will. This last will and testament can be prepared by your attorney and will indicate that any items left in your name are transferred to the trust upon your death, so that your trust will be complete and provide all the benefits you intended.

Double check your list of assets to be certain you have moved them all to your trust. Ensuring that your living trust is properly funded will provide you with the protection you seek as well as the peace of mind that your affairs are in order.

WFB LEGAL CONSULTING, INC.–LAWYER for BUSINESS

A BEST ASSET Protection Services Group

DISTINCTIONS BETWEEN TRUST AMENDMENTS AND RESTATEMENTS

A Trust Amendment is a legal document that changes specific provisions of a Revocable Living Trust but leaves all of the other provisions unchanged, while an Amendment and Restatement of Trust completely replaces and supersedes all of the provisions of the original Revocable Living Trust.

Understanding the Basics of Revocable Living Trusts

Before discussing when Trust Amendments or full Amendments and Restatements are required, you’ll need to understand what a Revocable Living Trust is – a legal contract between the Trust maker and Trustee that can be changed at any time and requires the Trustee to oversee the management of property transferred into the trust by the Trust maker for the benefit of the Beneficiary of the trust.

The key to a Revocable Living Trust is the fact that it’s revocable – meaning that at any time while the Trust maker is alive and competent the Trust maker can change, modify, update, or completely revoke the provisions of the trust agreement. Since this is the case, the name of the legal document that’s required to change, modify, or update the trust agreement is called a Trust Amendment and the legal document that’s required to revoke the trust agreement is called a Trust Revocation.

Contrast a Trust Amendment with a Trust Amendment and Restatement, which is a type of trust amendment that completely supersedes the terms of the original trust agreement. The name and date of your trust will stay the same (for more on this, see below), but each and every provision of the original agreement will be replaced by the terms of the restatement.

When Are Trust Amendments vs. Restatements Required?

While there aren’t really any written rules as to when an Amendment instead of a full Amendment and Restatement is required, the general rule is that if the changes that the Trust maker wants to make are minimal – adding or deleting specific bequests, changing who will serve as Successor Trustee, updating a beneficiary’s or Successor Trustee’s legal name due to marriage or divorce – then a simple Trust Amendment will cover these types of changes.

On the other hand, if the changes that the Trust maker wants to make are significant – adding a new spouse as a beneficiary, completely cutting out a beneficiary, changing from distributions to family members to distributions to charity or vice versa – then a complete Amendment and Restatement should be considered.

What if you’ve made a series of three or four simple Trust Amendments over the past 10-15 years and you want to make another change? Then consider consolidating all of your changes into a complete Amendment and Restatement – this will prove to be helpful to your Successor Trustee who will have a single document to follow instead of piecing together the provisions of four or five separate documents.

The Legalities of Trust Amendments

If you’re considering making a change to your Revocable Living Trust, don’t simply mark up your trust agreement and stick it back in the drawer. Why? Because a Trust Amendment must be signed with the same formalities as the original trust agreement, so your handwritten changes will, depending on applicable state law, either void the trust agreement or be ignored. Instead, ask your estate planning attorney to prepare the Trust Amendment for you so that it will be legally valid and binding on all of your beneficiaries.

Will the Name of Your Trust Change if You Amend or Restate It?

The answer is No – the nice thing about doing a Trust Amendment or an Amendment and Restatement is that the original name and date of your Revocable Living Trust will remain the same. That way, all of the hard work you put into funding your Revocable Living Trust under the original trust name and date won’t need to be undone.

 

Presented by WFB LEGAL CONSULTING, Inc.Lawyer for Business. A BEST ASSET PROTECTION Services Group