Funding a bank account “in” to a California revocable living family trust

For 20 years I have been telling people how to “put” their bank accounts and other assets into their trusts.  Some things, like real estate, are pretty easy. We just prepare a deed, our client signs it, and we send it in for recording.  Clients who work with full service financial professionals also have it easy as the staff at those financial companies tend to be well trained at trust funding.

We usually start with a letter to the financial institution. If that doesn’t do the trick then we always advise our clients to go into the branch if that’s possible. Some things are just best done in person though.  I have not put a new asset into to my wife and my trust in some years.  We have had a trust for about 15 years, banked at the same credit union throughout, and never put our main bank account into our revocable trust.  What’s that story about the cobbler’s son….

Ok, the balance isn’t huge but it’s enough that it would come in handy for our successor trustee should they need money to pay bills if we are incapacitated or deceased. So we finally did it!  I actually first went in a few weeks ago but the friendly credit union employee told me that my wife had to be there since she was primary holder on the account. So for the next two or three weeks my wife and I talked about going in. Finally yesterday, Saturday, we strolled in as they opened their doors at 9:00.  The whole process took 15 minutes.

So what happened?

We handed the credit union employee our certification of trust or trust certificate or, what some call, a certified extract or abstract. In summary it’s a shortened version of your trust.  Our “CE” is usually two pages including the notary block.  In our opinion the goal of the CE is brevity and just giving the bank, credit union or financial institution what they need.  I am going with the assumption that banks and credit unions generally have the same requirements. However, is important to note that each bank or CU has their own rules. Plus, as I like to (half) joke, each bank or credit union branch may have their own rules… and of course each bank or CU employee may do things differently.  So take this for our actual experience. Your experience should be similar.

We gave the employee the CE and he proceeded to go through our account on his computer.  We have several sub accounts set up so it took him a several minutes to check boxes and enter the trust name for each one.  Then he took the name of our successor trustee, from the CE, and entered that into the computer.  He then asked for the name of our beneficiaries. I told him that in the past I have preferred to put “named individuals” as I don’t like to divulge the private information that is our beneficiaries (actually just our kids).  He explained that the NCUSIF (National Credit Union Insurance Fund) which, he claimed, is essentially the same as the bank’s FDIC gives the $250,000 per person insurance to each beneficiary.

Ok, let’s stop here for a second and take a detour. I do not know if what he says is right. Since my account has well below $250,000 it’s a non-issue for me. However, if your account is anywhere close to $250,000 you should definitely check, double check and triple check the rules.  My advice is always to have less than $250,000 at any one bank. Why take a chance with interpreting the FDIC or NCUSIF rules?  Is it really the contingent beneficiaries I asked the employee?  Why not the current beneficiaries? It doesn’t make any sense to me. So, again, let me repeat that I encourage you to never exceed $250,000 at a financial institution unless you are comfortable with their insurance rules.

So the nice and informative employee finished inputting everything and then had us sign (electronically) new signature cards confirming everything on the account and information about our trust.  It was easy.

Let me stress a couple things:

  1. Our account numbers did NOT change at our credit union (this varies among different banks and CUs);
  2. Our checks do NOT have the name of our trust on them (again this varies);
  3. It took about 15 minutes.

The key here that to have a trust and not spend these 15 minutes just exposes your loved ones to a probate after your passing or incapacity so take the time and fund that trust!

Contact us with questions.  -John



Top 10 Estate Planning Mistakes

As a California estate planning and probate attorney I see both sides.  I see the planning process and I see what happens, after death, when the planning wasn’t done right.  Here is a top 10 list of estate planning mistakes:

10. Name your estate the beneficiary on your IRA, 401k, and other retirement plans. This is a great way of creating unnecessary tax and probate fees and costs. It also will delay the time when your family will have access to the money.  Attorneys and the tax man will love you for it! Your family won’t be so happy with you though!

9. Name your estate the beneficiary on life insurance.  Similar to above it creates unnecessary delay in access to the money and causes costs and fees.  Your family won’t love you for this.

8. Name no beneficiary on your 401k and other retirement plan.  In some cases the money will flow to your estate and create taxes, fees and costs as indicated at #10 above. However, some plans have a written list of heirs if no beneficiary is named and that list might be different than who you want to give the assets to!

7. Leave money to minor children or to your estate.  By doing this your kids will get your money when they turn 18. They will love you!  Also, the new car salesmen, car stereo salesmen, many other salesmen and also all of their friends will love you!  Plus, your kids will love you for the 6 months it takes them to burn through your money.

6. Outsmart the tax man and add your kids onto your house as a joint tenant.  Sure you might avoid attorney fees for a living trust but you might create a capital gains tax at death due to losing the full step up in basis. The IRS will love you for paying unnecessary tax.

5. If you have a safe deposit box don’t tell anybody about it. Just leave the key.  The family will love the treasure hunt going bank to bank throughout town looking for it. Of course, if you move to a new town before dying that treasure hunt is totally fruitless and they probably won’t be so happy with you.

4. Don’t fully fund your trust.  So many people go to the trouble and expense of creating a living trust but then they fail to put all the assets into their trust.  This creates unnecessary probate fees and costs.  Your attorney will love you!

3. If you re-finance your house do not put your house back into your trust. As above it creates an unnecessary probate and thus your family or loved ones will have to deal with the cost and delay of that. Again, your attorney will be appreciative!

2. Don’t use a certified specialist for your estate plan. It’s a great way of getting an inadequate estate plan. Sure you might, or might not, save a few bucks but….

1. Don’t have any written estate plan. It’s a sure way to cause problems and unnecessary money to be spent after death. If you want to really upset your family do nothing!

Really if you love your family avoid these 10 and hire a Certified Specialist in Estate Planning, Trust and Probate law as determined by the State Bar of California Board of Legal Specialization.  Contact me with your questions.  -John

Ten characteristics of a good trustee

When I go through the estate planning questionnaire with a client I suggest they think long and hard before selecting their trustee. In fact, if they hesitate for a split second when naming someone I ask about it. For example, they might say, “well our son is probably our first choice… well… ahhh….”  The second I heard the word “probably” I was wondering what that was about. I know it does not mean their son is dishonest but maybe he has an overbearing wife? Or maybe he and his brother don’t get along. Or who knows!? The point is there is a reason they said “probably.” I thus bring you 10 characteristics to look for in your chosen trustees in no particular order:

– Trustworthy

– General competence

– Financial experience

– Life experience

– Ability to see things from the beneficiaries point of view

– Geographic location

– Above reproach

– Wants to do it

– Understand’s your desires

– Understands your future beneficiaries needs

I could go on but this is a good starting point. Let’s talk about your trustees!


A/B Trust Options

The “A/B” trust is a very common set-up for married couples in the estate planning world.  I should say there are different names for these trusts. I call it an A/B Trust. Others may be call it a Bypass trust, a credit trust or even a 1/2 trust. Whatever you call it a split trust is a common estate planning vehicle. How does it work?

There are 4 main options for a standard husband and wife to consider in trust planning. That is, at the first death what happens to the trust.

1) Totally revocable: This is the simplest trust. I call it a “probate avoidance” trust. It’s the simplest and most straight forward trust. The downside though is that the surviving spouse can completely change the trust and disinherit the kids. However, assuming no estate tax issues this is a good option for many people with more modest estate sizes.

2) A/B Disclaimer Trust: This is a very common trust set up for married couples. It allows the surviving spouse to “disclaim” assets within 9 months of death of the first spouse’s death. This is typically if they are concerned about estate taxes or if they are very concerned about making a bad decision in the future as it limits their ability to change the trust to the A trust as the B trust is irrevocable after the first death.

3) Mandatory A/B Trust: This is common for second marriages or for people with inherited or other separate property assets. It mandates a split into two trusts at the first death. For a long time it was the predominant trust utilized by estate planning attorneys. However, with the great changes in estate tax exemptions the mandatory A/B is used less often now.

4) Totally irrevocable: This is only for elderly people in my opinion. That is, your basic husband/wife trust should not be totally irrevocable at the first death unless you are really confident you won’t get remarried or want to make any changes.  I say 85 years old and up for this. In fact, this trust is the least used of the four.

Whatever trust works for you works for me. There are many A/B trust options so pick what works for you!  Let me know if you questions about your trust set up!  -John

Title your assets with precision


An estate planning attorney should be precise in their work. At times clients think we are over the top at our office when we re-do something. We explain there is a reason.  If something is done the tiniest bit wrong it could be a HUGE problem later on.


Today I am helping a client after his dad died. I will not use the real names but let’s say the guy that died was named John C. Dough.  The trust full and formal name is:

John C. Dough, Trustee of the John C. Dough Trust, Dated 5/5/85

He bought a new house some years ago and the title company prepared the deed. I have to say I am amazed how often title companies mess up deeds. The title company prepared the deed as:

John C. Dough, Trustees of the John C. Dough Living Trust, Dated 3/13/04

You see the differences?

1) Obvious typo in making trustees plural even though there is only one trustee. Not a big deal.

2) They added the word “living” to the trust name. This would not be critical if it were the only error.

3) They changed the date to a completely different date from when the trust was created. It was actually the date of an amendment but the date of the trust does not change by an amendment.

One error was not critical but two errors could be a huge problem!

The problem is this. Mr. Dough is deceased so he can not simply prepare a correctory deed as we otherwise could do.  Mr. Dough’s son has documents showing he is the trustee of the John C. Dough Trust Dated 5/5/85 and he also has an amendment dated 3/13/04. However, NOWHERE does Mr. Dough’s son have a trust agreement called the John C. Dough Living Trust with any date.


The first call is to the title company. Maybe they can fix it. However, I told the client do NOT let them promise everything is fine. It’s NOT and when my client’s daughter goes to sell the house in the future there will likely be a problem selling it. I believe the first option is for the title company to pay for title insurance and establish it in the proper trust name and date.

If the title company won’t do that then I have recommended to the client that he petition the Court to get a Court order establishing the property is in the original 1985 trust name and date. I would then record that order.


Use precision with your trust titling. Don’t cut corners. Don’t listen to a bank or title company who says it’s fine. It is NOT fine. Get it exactly right!

Lack of trust funding and the small probate estate


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.


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.


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 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.


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.

Trust Certification

I am often asked to help walk a client through a trust certification form. Either for a re-fi on their mortgage or a new bank account. After filling out 25 of those, or more, the last year I thought I would post it here to help my readers know exactly what is needed. This is a sample trust certification or certification of trust or certified extract of trust or certified abstract of trust.

If you have any other questions or wish to reach out to me, please give me a call at 916-920-5983 and we can talk further.

Well, with no more delay, here you go:


I/We, ________________________________________, [enter your names here] trustee(s) of the ______________________________ [name of your trust here] confirm the following facts1. The ________________________________________ [name of your trust] is currently in existence and wcreated on ______________________________ [Date your Trust was signed].

2. The settlor(s) of the trust are as follows: _____________ [enter your name(s) here]
3. The currently acting trustee(s) of the trust is/are:__________ [enter your name(s) here]
4. The power of the trustee(s) includes:
a. The powers to sell, convey and exchange ¨ Yes ¨ No (check one) [most likely YES]
b. The power to borrow money and encumber the trust property with a deed of trust or mortgage
¨ Yes ¨ No (check one)[most likely YES]
5. The trust is ¨ revocable; ¨ irrevocable (check one) [typically these are filled out for REVOCABLE trusts but of course some, especially after death, may be irrevocable] and the following party(ies) if any, is/are identified as
having the power to revoke the trust: ______________ [your name(s) here]
6. The trust ¨ does, ¨ does not have multiple trustees (check one). If the trust has multiple trustees, the
signatures of all the trustees or of any
of the trustees is required to exercise the powers of the trust.
7. The trust identification number is as follows:
(Social Security Number/Employee Identification Number) [typically the social security of either settlor goes here]
8. Title to trust assets shall be taken in the following fashion: ________________ [Your name(s) as trustee of the _____ trust, dated ______________ ]

The undersigned trustee(s) hereby declare(s) that the trust has not been revoked, modified, or amended in any
manner which would cause the representations contained herein to be incorrect. This certification is being signed
by all of the currently acting trustees and is being executed in conformity with the provisions of California Probate
Code Section 18100.5, Chapter 530, Statutes of 1993.
IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below.
By: ____________________________________
State of
County of
On ______________________________ before me, , Notary Public,
(here insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature ____________________________________(Seal)

Independent Trustee is a Special Trustee

Not all trustees are independent and not all trustees are special… but the terms “independent trustee” and “special trustee” have the same meaning in estate planning. They are an unrelated and economically disinterested person with limited authority in a trust. Not all trusts will have such a trustee as the vast majority of trusts just have a standard trustee. However, in some situations this special trustee is advisable.

In one of the trusts the term is defined as:

An Independent Trustee or Special Trustee shall mean a Trustee who is neither a Beneficiary of any trust established under this instrument nor a person who has transferred or joined in the transfer of property to the trust estate.  If a General Power of Appointment held by a Beneficiary of a trust may only be exercised with the consent of the Independent Trustee, the term Independent Trustee also means a person who does not have a substantial interest in the property subject to the power which is adverse to the exercise of the power in favor of the Beneficiary, the Beneficiary’s estate, the Beneficiary’s creditors, or the creditors of the Beneficiary’s estate.  If at any applicable time no Trustee then serving is an Independent Trustee, the first successor Trustee named or designated herein shall serve as the Independent Trustee for the sole purpose of exercising or not exercising the Independent Trustee’s powers.  If no successor Trustee named or designated herein would qualify as an Independent Trustee, the then serving Trustee shall petition the Court having jurisdiction over the internal affairs of this trust for the appointment of an Independent Trustee for the sole purpose of exercising or not exercising such powers.

In that same trust, later on the document names the Independent or Special Trustee with the following language

For any trust created herein, but only during the lifetime of the Settlor(s), the Settlor names as Special Trustee and successor Special Trustee, in the order and priority indicated, the persons listed below. The Special Trustee’s duties shall be limited to the exercise of discretion under this trust, and the Special Trustee shall not be concerned with other aspects of trust administration. The Special Trustee shall receive reasonable compensation.   Any Special Trustee may resign. The Special Trustee is JOHN DOUGH. If Mr. Dough is unable to act the Settlor(s) reserve the right to name a new Special Trustee provided that the new Special Trustee is not a related party as defined by IRC Section 672(c).  Notwithstanding anything herein to the contrary the Special Trustee shall specifically have the following powers exercisable as related to the children, and subsequent heirs, of the Settlor(s):

                        i.    the right to modify or amend the trust instrument to achieve favorable tax status or respond to changes in the Internal Revenue Code, state law or the rulings and regulations there under;

                        ii.   modify the terms of any power of appointment granted by the trust (although a modification or amendment may not grant a beneficial interest to any individual or class of individuals not specifically provided for under the trust instrument);

                        iii.  power to remove and name a new Trustee, trust advisor, investment committee member or distribution committee member;

                        iv.  terminate the trust;

                        v.   veto or direct trust distributions;

                        vi.  change situs or governing law of the trust, or both.

                        vii. appoint a Successor trust protector

                        viii. interpret terms of the trust instrument at the request of the Trustee; and

                        ix.  advise the Trustee on matters concerning a beneficiary. 

Hopefully this helps you to know why these trustees are special and independent   If you want to discuss how such a trustee could improve YOUR estate plan let me know.


Best States for Dynasty Trusts – 2012

Each year my law school classmate, Steve Oshins, puts out a list of the top states to use for a “dynasty trust” and for a asset protection trusts. He just released his dynasty trust rankings.

A dynasty trust is a trust designed to live as long as possible, from generation to generation, or a “Rockefeller Trust” as I like to call them. The government, long ago, determined that creating a taxable event at each death was important… and likewise smart attorneys came up with ways around the tax.  The dynasty trust is the best way to pass wealth, for many generations, without tax.

Steve Oshins, a 1994 graduate of the McGeorge School of Law (University of Pacific), like me, is one of the nation’s foremost experts on dynasty trusts. He has been quoted in major publications like Forbes and the Wall Street Journal.  Steve often speaks about dynasty trusts and each year publishes his ranking of the top states to house your dynasty trust. Here is the link to Steve’s latest rankings.

Listing all assets in estate planning

Below I have posted a sample of the information we like to have when we do estate planning. Though we do not require the information it’s helpful to us. It’s helpful in different ways. Let’s discuss.

First, the dollar amounts are certainly not required but knowing the approximate estate size helps determine what plan is right for YOU.  Often clients do not think about the true size of their estate until they put it on paper. Often it adds up to more than they thought. That is, by the time you add your IRA, 401k, life insurance, and other things to your home equity and savings accounts the value can jump up!

Second, we can’t fully fund a trust if we don’t know about all your accounts.  Having the name, account number and address helps us to help you fund the trust!

Third, it’s a great help to your family, friends, loved ones and trustees later. That is, at your incapacity or death how do they know what assets exist? The only way they know is if they have a list. Where do they get a list? From YOU.

Here’s a sample of the questions we go over with you during the estate planning process.


1)      CASH AND SAVINGS (Please supply bank name, address and account number)

Checking Account                   $ ___________

Certificates of Deposit (CDs)  $ ___________

Credit Union                            $ ___________

Savings Account                      $ ___________

Money Market                         $ ___________

TOTAL CASH AND SAVINGS                                $ ______________


2)     MARKETABLE SECURITIES (Please include bank name, address and account number)

Stocks                                      $ ___________

Bonds                                      $ ___________

Mutual Funds                          $ ___________

Annuities                                 $ ___________

Gold and Silver                       $ ___________

TOTAL OF MARKET SECURITIES                       $ ______________


3)     REAL ESTATE  (Please list address, city and state)



i.   _______________________________           ______________________________________

ii.  _______________________________           ______________________________________

iii. _______________________________           ______________________________________

TOTAL EQUITY IN REAL ESTATE                      $ _______________



4)     FIXED AND OTHER ASSETS (Please supply additional information if available)


Business Interests                    $ ___________

Limited Partnerships               $ ___________

Notes Due                               $ ___________

TOTAL OF FIXED AND OTHER                           $ ________________


5)     RETIREMENT PLANS (Please bring bank name, address and account number)


IRA (Standard Deductible)      $ ___________

IRA (Roth IRA)                       $ ___________

Keogh                                      $ ___________

SEP                                         $ ___________

401k                                        $ ___________

403B                                        $ ___________

Profit Sharing Plan                  $ ___________

TSA                                         $ ___________

ESOP                                      $ ___________

PASOP                                    $ ___________

Deferred Compensation          $ ___________

Pension Plan                            $ ___________

TOTAL OF RETIREMENT PLANS                        $ ________________


6)     LIFE INSURANCE (Please list life insurance company and agent, if you know)


Face Value of Policy #1          $ ___________  (Term  or   Whole Life?)

Face Value of Policy #2          $ ___________  (Term  or   Whole Life?)

Face Value of Policy #3          $ ___________  (Term  or   Whole Life?)




7)      OTHER ASSETS (Cars, boats, collectibles, etc.)

$ ___________

$ ___________

TOTAL OF OTHER ASSETS                      $ ________________




GRAND TOTAL OF ALL ASSETS                        $ ________________

Ratings and Reviews

10.0John Bernard Palley
Wealth Counsel Member
2015 Best of the Best Badge