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Elderlaw: 05/15/2015

Elderlaw Advocates



Dear Len & Rosie,

My husband died three weeks ago. He had a trust of his own. If he has some accounts that are not in the trust and have no beneficiary listed, who inherits those? He has two sons. I, his wife, am co-executor of his will and co-trustee of his trust with his oldest son.

Margot



Dear Margot,

Once your husband created his trust, his only real job after that was to fund his trust with his assets. Trusts avoid probate, but only for those assets that are owned and titled in the name of the trustee of the trust. If he left accounts in his name alone, outside the trust, and without any joint tenants or beneficiaries, then he didn’t finish the job. Now it’s up to you and your stepson to do it.

These non-trust assets will pass under the terms of your late husband’s will. Since he has a trust, it’s more likely than not that the will is a “pour-over will” that leaves the estate to the trust.

If the total value of the non-trust assets is less than $150,000, then there’s no probate necessary. The persons inheriting these accounts, the “successors in interest”, can collect the accounts directly, without probate, using small estate declarations under California Probate Code section 13101. You’ll have to wait 40 days or more after your husband’s date of death to do this, however, and there are other issues to consider, such as whether or not the trust requires a taxpayer identification number, obtained from the IRS.

If the total value of the non-trust accounts in the probate estate is more than $150,000, then there are only two options. The first is probate. This is expensive and time consuming.

The alternative to probate is to petition the court seeking an order declaring that these assets are really owned by the trust, no matter what the account statements say. There’s an appellate court decision in California, called “Estate of Heggstad,” that basically stands for the proposition that if your husband’s trust document includes a list of trust assets, then the trust document itself may be a valid assignment of assets to the trust, despite your husband never having gone to his banker and broker to retitle his accounts into the name of the trust.

There’s also another appellate decision in a case named “Heaps vs. Heaps,” that can be used to drag into a trust non-trust assets that were purchased with trust property. A good example of this is if your husband sold a home held within his trust and put the money into a brokerage account titled in his name alone.

These techniques don’t work in every case. Our point is that you don’t necessarily have to file for probate if a trust isn’t funded properly. You and your stepson should gather your husband’s account statements, deeds and stock certificates, together with his trust and other estate planning documents, and review everything with a trusts and estates attorney.

Len & Rosie

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at www.lentillem.com. Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.
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