Father’s living trust is missing
Dear Liz: My 82-year-old father, who is in a nursing home in California after multiple strokes, had always told me that he set up a revocable living trust for himself and my mom. I’ve been going through his papers and can find only unsigned copies of his trust.
My dad now suffers from some dementia, and my mom knows nothing about where he might have put a copy of the trust. I do not think a lawyer was involved.
I am worried about what will happen when my dad dies. Are revocable living trusts recorded somewhere? If so, how do I find his? Can my mom set up a new trust? They don’t have a lot of assets — just a house and car — so am I worrying needlessly?
Answer: Your dad can’t sign the copies or have a new trust created if he’s not mentally competent — and with the strokes and the dementia, he’s probably not, although you’ll probably want to consult a lawyer. Without a durable power of attorney, no one else can have estate documents created for him, either.
You can check with the county assessor to see if their home was transferred into the trust and with his bank to see if accounts are in the name of the trust.
But living trusts aren’t recorded anywhere. If you can’t find a copy of it and if assets, such as the house, weren’t transferred into the name of the trust, you can’t use the unsigned copies to avoid probate, said Burton Mitchell, a Los Angeles estate planning attorney with Jeffer, Mangels, Butler & Marmaro.
“This is like the tree falling in the forest” with no one to hear it, Mitchell said. “If no one can find a living trust, I guess it doesn’t exist.”
You may want to expand your search. Check your dad’s papers for any bank he may have done business with, and find out whether he had a safe deposit box there. If he didn’t trust a bank with the document, it may be hidden somewhere in the house. Estate appraiser Julie Hall, author of “The Boomer Burden: Dealing With Your Parents’ Lifetime Accumulation of Stuff,” said heirs have found documents hidden in freezers, taped to attic rafters, tucked under mattresses and slipped behind the mats of framed pictures, among other places.
Review your dad’s checkbook around the period when the documents were created, if possible. If a check was made out to an attorney during that time, the signed document may have been filed with him or her.
It’s worth putting some effort into this search. A house in California can be a considerable asset. Unfortunately, probate in California is expensive and slow. That’s why many people with even modest assets opt for a living trust: to bypass probate and save their heirs money.
The house may be able to avoid probate if it’s titled in joint tenancy, Mitchell said. In that case, if your father dies first, your mom will inherit it and then could create a living trust of her own.
Social Security benefits don’t last forever
Dear Liz: Can you clear up something for me regarding Social Security survivors benefits? The yearly summaries I get tell me my family will receive payments if I die. But it’s not clear to me how long these last and if they expire when my children are no longer minors. Do payments continue to be made to my surviving spouse as well, and if so for how long?
Answer: Your unmarried children can receive Social Security survivors benefits until they turn 18, or 19 if they are still attending high school full time. Your kids can get benefits at any age if they were disabled before age 22 and remain disabled.
Your spouse can get benefits as long as he or she takes care of a child receiving your survivor benefits. Your spouse also can receive widow or widowers benefits as early as age 60 (or 50 if disabled).
The amount of the benefit depends on your average lifetime earnings and is estimated on the annual Social Security statement you get. The more money you make before you die, the greater the benefit.
For more information, SSA Publication No. 05-10084 is available on the Social Security Administration website at www.ssa.gov or by calling (800) 772-1213.
How to do an estate plan on the cheap
Dear Liz: We want to have an estate plan that doesn’t cost a ton of money. We’re both in our early 40s and have no children. I’d label us middle class, with not much money left over after monthly bills. Lawyers want too much money to “help” us. Isn’t there a better solution?
Answer: If your estate situation is truly simple, you can draw up the documents you need with Quicken WillMaker software, which is available from the self-help legal publisher Nolo at www.nolo.com. The software costs about $50 and guides you through the process of creating wills and durable powers of attorney (which you need to name someone to make financial and health decisions for you should you become incapacitated).
Nolo also has an online will form, plus a number of books that can help you, including “Plan Your Estate” and “The Busy Family’s Guide to Estate Planning.”
The do-it-yourself approach can work when your situation is straightforward, but you should consider consulting an attorney if your estate ever gets big enough to worry about estate taxes or if complications (such as children or contentious relatives) become a factor.
Beware becoming trustee of a sibling’s money
Dear Liz: My parents have named me as the executor of their estate. They are elderly, and I will be called upon to perform this duty in the next few years. My sister and her husband are not good money managers. My parents’ wills have been set up to put my sister’s share into a trust administered by me. Is there any way for me to protect this inheritance from a future bankruptcy?
Answer: “Spendthrift trusts” are designed to keep profligate heirs from wasting an inheritance and keep creditors from seizing the trust money. These are fairly common trusts, but the wills have to be properly worded; if you’re not sure, have an experienced estate-planning attorney review them.
While you’re asking your parents for copies of their wills, see if you can talk them into naming someone else to be the trustee. Putting one sibling in charge of another’s money is a recipe for disaster and continuing disharmony. Even if your sister understands she’s hopeless with money, she is almost certain to resent you for standing between her and her inheritance. In many cases, the family would be far better off paying a fee to a bank or a professional fiduciary to be the “bad guy” controlling the cash.
Can the guardian of your kids change his mind?
Dear Liz: When you create a will and appoint someone to be the guardian of your children, must that person be present to sign legal documents accepting the job? And can that person later change his or her mind?
Answer: The person you name to be the guardian of your children does not have to be present when you create your will or other estate-planning documents.
But you better make darn sure that you have the potential guardian’s willing consent.
Taking care of someone else’s children is a huge responsibility, and not one that should be taken, or given, lightly. You’ll want to have a full and frank discussion with this person in advance, including what financial arrangements you’re making to take care of your children should you die while they’re minors.
Even if the person consents, understand that nothing is written in stone. Should you die, the person still could change his or her mind and decline the job. That is one of the reasons why you’ll want to name at least one back-up person in case your first choice can’t or won’t serve.
Also, many attorneys would advise you to name one partner in a couple as primary guardian, rather than both parties. If the couple later splits up or one dies, you don’t want any confusion about who you wanted to take care of your kids.
As difficult as these discussions and choices can be, you should make the effort. If you don’t name a guardian, they could wind up at the center of a bitter court battle, or in foster care. Your kids deserve better.
