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Lack of trust funding and the small probate estate

INTRODUCTION

It seems a day does not go by without speaking to a potential new client regarding their parent’s trust not being properly funded. There are different reasons this happened but the end result is they need to hire an attorney. This blog post focuses on the interplay of the small probate estate and funding a trust post-mortem.

HOW IT HAPPENS

A trust does not get funded for so many reasons. The most common are:

1) Client did trust themselves (or with on-line service or forms) and didn’t get assets into the trust;

2) Client hired a paralegal or inexperienced attorney and they didn’t properly take care of trust funding;

3) An asset was acquired after the trust was established;

4) The asset was an oddball thing that even a good attorney might miss.

IT SEEMS TO OBVIOUS

After death the lack of trust funding always seems so obvious. Of course, you have 20-20 hindsight and you can actually see the asset is NOT IN THE TRUST. However, it’s much harder during life. The most common problem is probably that clients, when they set their trust up, see the asset listed on a schedule of assets and thus assume that means the trust is funded. This is simply not the case. You have to take active steps to “fund” the trust.

WHY SMALL ESTATE

Why does this article focus on small estates?  Quite simply put the vast majority of trust funding omissions can be corrected by a procedure other than a full probate.  The most common choices are:

1) A Heggstad petition (probate code 850);

2) An Affidavit re: real property worth less than $50,000 (probate code 13200);

3) A Succession to real property petition for real property worth less than $150,000 (probate code 13150);

Using one of these three options can clear the vast majority of assets to a trust. NONE of these are full probates.  That’s a totally different thing.

YOUR CASE

If you want to see which options might work for YOUR CASE let us know. We can generally offer a free analysis to make sure your case is done as efficiently and economically as possible.

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