Titling, titling, titling….
As with real estate it’s location, location, location with trusts, it’s titling, titling and TITLING! What do I mean? Well, there are several issues that can arise with trust titling errors which can cause big headaches for you and/or your loved ones.
The most common is a slightly different trust name. So, you have a trust titled the “John Doe 2010 Revocable Trust.” You fund the trust yourself, or use a sloppy attorney, and the property is deeded to the “John Doe Revocable trust.” Clearly it’s the same trust, right? Well, how do you know? More importantly, how does the title company know? See, a title company only has the recorded deeds and the trust document that you (or more likely a later trustee) provide them. If the documents have a different name they have no way to know which John Doe trust the property was recorded into. If the trust settlor is still alive then can easily fix this error. If they have died it can be a headache to fix. The lesson here is to be very careful when doing your trust funding documents to make sure that the titling matches your trust EXACTLY!
The second issue I see a lot is inadequate sub-trust funding. In fact, just this morning I was reviewing some documents which gave me the idea for this post. In the example today, husband and wife created the “Doe Family Trust.” When Mr. Doe died two sub trusts were created: “Doe Family Trust – Fund A” and “Doe Family Trust – Fund B.” The main trust document provides a certain order of successor trustees for Fund A and a different order of trustees for Fund B. However, there are NO successor trustees listed for the main Doe Family Trust. Thus, what happens if there is a bank account out there in the name of the “Doe Family Trust” without specifying Fund A or Fund B. Who should the back-up trustee be? Fund A has her relatives and Fund B has his relatives. Arguably the trust is still revocable as the wife is still alive and thus we could prepare a trust amendment to clarify that the successor trustee of the Doe Family Trust is Jane Doe’s daughter Jill. However, what if Jane was incapacitated or even dead, then what? Again, it’s all about accuracy with trust funding!
The failure to be accurate in your trust funding can create a trip to the probate Court!
Please use a careful attorney to create AND FUND your trust. If that fails, go to an experienced attorney to clean up the mess!
As always contact us if you need an experienced estate planning and trust attorney.