Ask Liz Weston

Get smart with your money

living trusts

Q&A: Do you need a new will when you move to another state?

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Dear Liz: I have a will, properly done by an attorney, in my home state of Texas. I’m thinking of moving to California. Will the state of California recognize and accept my will?

Answer: The short answer is yes, but you should consult a California attorney anyway.

California generally recognizes a will that was valid under the laws of the state where it was executed. But moving to another state can affect other aspects of your estate plan.

Probate in California — which is the court process that typically follows death — can be expensive and protracted. A will doesn’t avoid probate, but a living trust can. The two states also differ in how marital property is treated, even though both are community property states.

Two other documents you should have — a power of attorney for finances and an advanced healthcare directive — also would benefit from updating. These documents allow you to name trusted people to make decisions for you if you’re incapacitated. Having California-specific versions could make it easier for financial institutions and medical providers to accept them. Plus, it’s generally a good idea for the person making healthcare decisions to be physically nearby. That makes it easier for them to get to the hospital in an emergency, consult with doctors and see for themselves how you’re doing.

While you’re at it, take a look at your beneficiary designations for retirement plans, life insurance and other financial accounts. These designations typically override what your will or living trust says, so you’ll want to make sure to review and update those regularly.

As you may have read here before, estate planning is not a “one and done” chore. You should have an attorney review your documents every three to five years and after any major life event, including a move to a new state.

Q&A: Another place to search for a lost living trust

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Dear Liz: In a recent column, you quoted an estate planning attorney who suggested ways to find a copy of a living trust after a parent’s death. I have no quarrel with her advice, but suggest a simpler option to consider: See if there is a bank safe deposit box in which such a trust might be located.

Older individuals tended to keep safe deposit boxes for decades, and if a child finds a key in the living mother’s possession, that might be a good place to look for the missing documents.

Answer: It’s worth a shot.

The parent in question, who suffered from dementia, destroyed information related to the living trust, including the document itself and the name of the attorney who drafted it. Estate planning attorney Jennifer Sawday suggested checking the deed to the parent’s home, since the attorney or law firm may be listed as the party that requested the deed be recorded when the home was transferred to the trust.

Estate planning experts typically advise against storing living trusts, wills and other estate documents in safe deposit boxes, since banks may restrict access after a death and delay administration of the estate. In this case, though, a safe deposit box might have protected the documents from the parent’s destructive tendencies.

Q&A: Can a bank help find a missing trust document?

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Dear Liz: Concerning the missing trust document, they should also check with existing banks and brokerages that the trust has accounts with to see if they have a copy of the trust. Odds are very low, but it may be worth the effort.

Answer: Banks and brokerages aren’t required to keep such copies, but it doesn’t hurt to check — and it’s certainly cheaper than going to court.

Q&A: What to do when a living trust document is lost

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Dear Liz: My parents created a living trust in 1999 and deeded their residence into the trust. Later, they sold that home, moved to another state and put their new residence into the same trust.

In 2014, my father was diagnosed with dementia. He died in 2020. During his illness, he destroyed most of the critical information related to the trust document, such as the attorney’s name and the trust document itself.

My mother relied on my father for all things financial. She is now 89 (bedridden but mentally sharp) and in need of funds to fix her house up for sale and to provide for her caregiving.

We went to the county recorder, but they could provide no advice and will not complete a property tax deferral without a copy of the trust document.

My credit union also will not fund a home equity line of credit without the trust document. Any recommendations in addition to seeking out an estate attorney?

Answer: Return to the county recorder’s office, retrieve the deed and check to see who requested the document be recorded, suggests Jennifer Sawday, an estate planning attorney in Long Beach.

Many attorneys put either their own name or the firm’s name in that field, she says. If you can identify the attorney and they’re still in business, you can contact them to see if they might have a copy of the trust.

Keep in mind that lawyers generally aren’t required to keep such copies. The attorney’s job is to properly prepare and deliver estate planning documents, Sawday says.

Once those originals are delivered, it’s the client’s responsibility to keep and safeguard them.

If a copy can’t be found, your mother’s legal options will be heavily dependent on the state law where she now lives, Sawday says. For example, in California, people can petition the court to establish the terms of a trust.

Attorneys sometimes use this process when a trust is discovered after someone has passed away, but the original document can’t be found, Sawday says.

An estate attorney can advise your mother about her options.

Estate planning should be an ongoing process. Any major life event, including a move to a new state or a diagnosis of dementia, should prompt a review of the documents.

Even without major changes, estate plans should be checked every three to five years and beneficiary designations reviewed annually. Many people resist paying for such reviews, but the cost of correcting a mistake can be considerably more.

Q&A: In estate planning, finding the right trustees can be a challenge

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Dear Liz: My partner of 37 years and I have shared a revocable living trust for much of that time. It has become necessary to update our successor trustees, since one has passed away and the second is our age. It has been pointed out that we ought to name younger people who are more likely be around when the need arises. This is becoming the hard part. Both of us have a single sister but they are also seniors, so not the best long-term choice. Nieces and nephews live out of state and are not the ideal choice, either. I am wondering about designating this task to an accountant or attorney firm but have absolutely no idea how to make this happen.

Answer: Yours is a common issue for “solo agers” — people who don’t have reliable adult children who can take over in case of incapacity or death.

Naming someone younger does increase the odds the person will be able to serve when the time comes, but nothing is guaranteed. That’s why Los Angeles estate planning attorney Burton Mitchell urges his clients to focus first on naming the best choices, rather than eliminating people because of age or geography. He also recommends naming multiple alternates. Circumstances change, and your first choice may not be available when you need them.

You want successor trustees who are trustworthy, dependable and honest. They don’t have to be relatives: Friends or professionals may be good choices if they’re willing to serve. Jennifer Sawday, an estate planning attorney in Long Beach, urges you to ask first before naming a tax pro, attorney or financial advisor, since many are unable or unwilling to serve in this capacity for clients.

Professional fiduciaries may be another option, or you can look for professional or corporate trustees. Your local bank may offer trust administration services, for example. These options obviously would be more costly than a friend or family member. Sawday recommends consulting a knowledgeable estate planning attorney who can recommend trust officers or professional fiduciaries for you to interview.

Even if you opt for a professional to handle the financial side, you may prefer to have a friend or relative serve as your healthcare decision maker should you become incapacitated. In that case, geography may matter, since the person may need to get to the hospital quickly or spend an extended period advocating for you. Even here, though, it’s more important to name the right people, rather than necessarily the closest ones. You want someone who understands your priorities and who will fight to ensure those priorities are honored. Someone older who understands the concept of a “good death” may be more appropriate than someone younger who doesn’t. (Katy Butler’s book “The Art of Dying Well” has helpful information for this choice.)

If you don’t have enough people in your life you can rely on, there’s still time to turn that around. As a fellow solo ager, certified financial planner Carolyn McClanahan recommends building a mixed-age community. McClanahan says this means making “care deposits” starting in your 50s by volunteering and mentoring younger people.

“If you come from a place of giving, when you get older, that tribe is willing to look out for you,” she says.

Q&A: Navigating the Risks of 401(k)s, IRAs, and Payable-on-Death Accounts

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Dear Liz: You recently wrote about the drawbacks of payable on death accounts, including that the funds go directly to the beneficiaries before the estate’s expenses are paid. Aren’t all 401(k)s payable on death? I’m often reminded to update my beneficiary info whenever I log into my account. Should 401(k)s be converted to IRAs once we leave our jobs when we retire? At least one of my 401(k) accounts from a previous job is still in that company’s plan, as it is a very good plan. Can we designate that certain expenses be paid from the accounts before our beneficiaries receive their inheritance?

Answer: Retirement accounts, including 401(k)s and IRAs, typically have named beneficiaries that will inherit the money directly. That means retirement accounts have the same potential drawback as payable-on-death bank accounts or transfer-on-death arrangements. If you have no other assets when you die, the person who settles your estate may have to appeal to these beneficiaries to return some of the money to pay your final bills. The beneficiaries usually would be under no obligation to cooperate, however.

You could name your estate as your beneficiary, but that could have some tax drawbacks so you should consult an attorney before doing so.