There are so many reasons why a trust remains unfunded or only partially funded at death. I have talked about it before. The most common situations are:
1) re-fi or reverse mortgage taken out before death. The house is usually removed from the trust to complete the loan and the title company does not put back into the trust.
2) A bank or investment account is moved to a new bank (better interest perhaps) but the trust ownership is forgotten.
3) An inheritance is received and the trust is forgotten.
4) A forgotten stock or bond is never put in the trust.
5) A business interest like a closely held corporation, partnership or limited liability company is not owned by the trust.
6) A life insurance, IRA, 401k, annuity or other asset with a death beneficiary, or “payable on death,” names the pre-deceased spouse with no contingent named. That is, the husband had his wife named on his life insurance policy as the beneficiary and she died before him. When he dies that policy will probably go to probate.
In all of these instances, and more, the family or other trusted individuals are trying to FUND THE TRUST AFTER DEATH. There are many options of how to do this. Typically doing a full California probate is the first option that people consider. It may be the best option. The companies ask for Letters Testamentary or Letters of Administration and that is what you go do. However, there are other options. Make sure you work with an experienced California probate and trust attorney so that you know all the options and get the proper information.
Full probates, small estate affidavits, under $100,000 petitions, and Heggstad petitions are among the options we often use.
I have become a state-wide expert on Heggstad petitions due to the frequency with which I employ this alternative for funding trusts after death. Just yesterday a fellow probate lawyer consulted me about his client’s case to see if a Heggstad was right in their case and whether it would be successful.
Filing a Heggstad petition, pursuant to California Probate Code 850, can be an efficient way to fund the trust. You have to have certain documents in place so let me review what you have to see if you qualify for a Heggstad petition. It can avoid the full probate process which is often, but not always, preferable. The attorney fees and Court costs are much less with a Heggstad petition than with a full probate. The key is analyzing all the options to make sure you do what’s overall the best choice.
Contact me to discuss your unfunded California trust and how we can best get it funded after death! -John