Los Angeles Estate Planning and Probate Attorney | Law Office of Philip J. Hoskins
Problems with trust assets
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On this page we will provide a very brief summary of California law regarding what to do about assets not properly transferred to your trust Our purpose is to raise some issues for your consideration both in planning your own estate and with regard to estates of persons who are deceased or their estate plan is hampered by imperfectly transferred assets.
What are trust assets?
Only those assets properly transferred to a trust are governed by the terms of the trust. For example, if a trust is set up and you own a house, you will need to create and record a deed which transfers your house from yourself to yourself as trustee of your trust.
Sometimes this step is overlooked and then there will be a problem when you die because the very purpose of the trust may be frustrated. If the house was not transferred by deed, it will be subject to the Probate requirements and will not be easily handled by the terms of the trust.
Other types of assets will have their own transfer requirements. For example, a stock brokerage account must be transferred on the books of the brokerage. A automobile must have a new "pink slip" and a bank account a new signature card.
Is there a remedy?
Many times there are ways to correct these mistakes. If you are married and your spouse dies leaving everything to you by Last Will, a Spousal Property Petition can be filed with the court to simplify the probate process.
If the asset is not held by a spouse, a Petition can be filed with the court asking that the asset be confirmed to the trust. Whether this petition will be granted or not will depend upon the facts.
For example, if your house was not transferred by deed to the trust but the trust itself refers to the property and confirms your intention to so transfer, that may convince a court to grant the petition (called a "Heggstad" petition).
There may be other facts that would convince a court that a particular asset was intended to be transferred to the trust but was overlooked or otherwise imperfectly handled.
All the remedies cost extra money
Most of these steps will require attorney assistance, and that means money in
fees and filing costs. You should consult an attorney familiar with this
practice area for information about your specific issues.