Every year we assist hundreds of new clients in creating their estate plans. For most, their plans are based upon a revocable living trust. At our signing appointments and in ongoing communications with clients via emails, 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, unfortunately, as a result, have caused their loved ones unnecessary cost, expense and delays.
To assist you in avoiding these avoidable 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 longstanding practice is to provide our clients with their original signed estate planning documents in a separate envelope marked “Original Documents – Keep in Safe Place”. (You can tell your original documents from copies as we have our clients sign their original documents with blue ink pens. The copies will have black signatures).
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. There is a tab in your burgundy estate planning binder labeled “Location Lists”. Under that tab, you should note where those original documents are located.
It is also important that your successor trustee knows how to access those documents. If in a safe deposit box, he or she should know where the box key is kept 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. and, when they can’t, delays and other problems can arise. It may not be sufficient to produce a COPY of these forms.
In summary, a word to the wise: 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, such as checking, savings, CDs, and money market accounts, investment accounts such as brokerage accounts, mutual funds and stocks, and business assets, such as stock in one’s own corporation, membership in an LLC and partnership interests. There is a tabbed section on Funding Instructions in your burgundy binder.
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. If you have questions about these assets, please contact us as the correct designation may vary based upon your marital status and other circumstances.
Unfortunately, when we discover after a client’s passing or incapacity that 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 on Needed 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 sought to be made when a person is seriously ill or near death, the validity of those changes, even if they can be made before the person’s demise, may be questionable and, therefore, subject to challenge. Persons on hospice care are often administered high doses of pain killing drugs which can also affect one’s mental abilities. Other conditions of old age, such as strokes and various forms of dementia, can also deprive one of the mental clarity 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