What happens when a step-parent out lives a biological parent?

Dear Len & Rosie,

My father passed away last December He and his wife set up a trust with an attorney a few years ago. My sister and I are his only legal adult children. His wife had five adult children when they married in 1982. I am trying to be sensitive to his wife in this difficult time. Unfortunately, she stopped talking to me before he died.

Months have passed and I have not heard anything regarding his will. I would like to know if my father designated any personal effects and/or monies to me in his will. Are there any rules or regulations that require them to notify me if I am mentioned in his will? What happens to his designation to my sister? She is out of contact with the family and unaware of his death. 

What can you tell me about estate notices I sometimes see in the newspaper? Does this notice apply to will that is held in a living trust?

Kathi

Dear Kathi,

California law has several things to say about what happens to your father’s estate planning documents upon his death. If he had a will, and he probably did because most people who create trusts have pour-over wills leaving their estates to their trust, then the person in possession of the original will must file the will with the Superior Court in the county where your father resided upon his death. If his will was properly lodged with the court, you can get a copy of it from the court’s files.

But your father and his wife had a trust, and that makes it different. Whether or not you are entitled to a copy of the trust depends on how the trust was written. If all or part of the trust became irrevocable upon your father’s death, then the trustee is required by California Probate Code section 16061.7 to notify you within 60 days of your father’s death of the existence of the trust and your right to a copy of the trust document.

On the other hand, if your father’s trust didn’t become irrevocable upon his death, then you do not have a right to a copy of the trust. This puts you in a Catch-22. Is your step-mother not giving you a copy because she’s being sneaky? Or is she merely protecting her right to privacy by not giving you information you’re not entitled to anyway.

You have a couple of options. One is to get a copy of the deed to your father’s residence. It’s probably in the trust, and you may get the name and address of his lawyer off of the face of the deed. If so, contact the lawyer and ask what’s going on. You may get some information that way.

If that doesn’t work, you can hire a lawyer to send your step-mother a letter demanding a copy of the trust. Even if you’re not entitled to a copy, this letter will likely cause your step-mother to visit her own lawyer, and that will probably result in everything being straightened out. But beware. If your step-mother has the right to amend the trust, she’ll likely disinherit any step-child she perceives as being “pushy”. Tread lightly.

Len & Rosie

The Importance of funding your trust with your assets.

Dear Len & Rosie,

My husband died three weeks ago. He had a trust of his own. If he has some accounts that are not in the trust, and have no beneficiary listed, who inherits those? He has two sons. I, his wife, am co-executor of his will and co-trustee of his trust with his oldest son.

Margot

Dear Margot,

Once your husband created his trust, his only real job after that was to fund his trust with his assets. Trusts avoid probate, but only for those assets that owned titled in the name of the trustee of the trust. If he left accounts in his name alone, outside the trust, and without any joint tenants or beneficiaries, then he didn’t finish the job. Now it’s up to you and your step-son to do it.

These non-trust assets will pass under the terms of your late husband’s will. Since he has a trust, it’s more likely than not that the will is a “pour-over will” that leaves the estate to the trust.

If the non-trust assets are worth less than $150,000 in total, then there’s no probate necessary. The persons inheriting these accounts, the “successors in interest”, can collect the accounts directly, without probate, using small estate declarations under California Probate Code section 13101. You’ll have to wait 40 days or more after your husband’s date of death to do this, however, and there are other issues to consider, such as whether or not the trust requires a taxpayer identification number obtained from the IRS.

If the total value of the non-trust accounts in the probate estate is worth more than $150,000, then there are only two options. The first is probate. This is expensive and time consuming.

The alternative to probate is to petition the court seeking an order declaring that these assets are really owned by the trust, no matter what the account statements say. There’s an appellate court decision in California, called “Estate of Heggstad”, that basically stands for the proposition that if your husband’s trust document includes a list of trust assets, then the trust document itself may be a valid assignment of assets to the trust, despite your husband never having gone to his banker and broker to retitle his accounts into the name of the trust.

There’s also another appellate decision in a case named “Heaps vs. Heaps” that can be used to drag into a trust non-trust assets that were purchased with trust property. A good example of this is if your husband sold a home held within his trust and put the money into a brokerage account titled in his name alone.

These techniques don’t work in every case, so sometimes a probate is necessary. You and your step-son should gather your husband’s account statements, deeds, and stock certificates, together with his trust and other estate planning documents, and review everything with a trusts and estates attorney.


Len & Rosie