This is an article from Northern California Center for Estate Planning & Elder Law (https://www.norcalplanners.com/) in Roseville, California, that we thought others may find helpful.
Every year we assist hundreds of new clients in creating their estate plans. Most of their plans are based upon a revocable living trust. At our signing appointments and in ongoing communications with clients via email, updates, and free workshops, we continually advise our clients about the proper care and feeding of their plans. However, notwithstanding these admonitions, each year we encounter some clients who have dropped the ball and caused their loved ones unnecessary costs, expense, and delays.
To assist you in avoiding these problems, we humbly suggest the following simple steps to maximize the chances of an efficient and cost-effective administration of your affairs.
1. Don’t Lose Your Original Estate Planning Documents – Our strong advice is to put these documents in either a safe deposit box at a bank or credit union or in a fireproof home safe. Your successor trustee should know how to access those documents. If in a safe deposit box, he or she should know where you keep the key and his or her signature should be on the signature card at the bank or credit union. If kept in a home safe, the trustee should be given the combination to the safe.
When administering your affairs, your successor trustee may be required to produce the ORIGINAL will, trust, power of attorney, etc. If they can’t, delays and other problems can arise. It may not be enough to produce a COPY of these forms.
In summary: Lock up your original documents.
2. Keep your trust funded! — Along with lost documents, a common problem following one’s death or incapacity is the discovery that one or more assets are not properly titled in the name of the trust. Remember, trusts can only control assets that are titled in the trust.
The assets that should be titled in the trust include real estate, bank accounts (checking, savings, CDs, and money market accounts), investment accounts (brokerage accounts, mutual funds, and stocks), and business assets (stock in one’s own corporation, membership in an LLC, and partnership interests).
You can typically check your most recent property tax bill to see how title to your real estate holdings are currently held. Similarly, various statements you get from financial institutions should reflect ownership by your trust. If in doubt, contact the company to confirm.
Certain assets, such as life insurance, annuities, and retirement accounts such as IRAs, 401k’s, etc. are handled a bit differently. These assets will pass according to the beneficiary designation form on file with the company holding these funds, even if your trust provides otherwise.
Unfortunately, when we discover a client’s passing or incapacity and some assets were not properly titled in the trust, there are often delays, additional expenses, and possible cumbersome court proceedings to address these issues.
3. Don’t Procrastinate Making Changes to your Trust– While we routinely assist clients with amending their plans due to changed circumstances requiring, for example, the naming of new trustees or adding and/or removing beneficiaries, the time NOT to make these changes is on your death bed. When changes are requested by a person who is seriously ill or near death, the validity of those changes, even if they can be made before the person’s demise, may be subject to challenge. People on hospice care are often administered high doses of pain killers which can affect one’s mental abilities. Other conditions of old age, such as a stroke or various forms of dementia, can also affect a person’s mental stability which is needed to create a valid legal document.
Heeding these simple admonitions will greatly increase the chances that your well-constructed and comprehensive estate plan will work when it is needed.