Estate & Trust Administration

Changing a Trust after death

A recent article regarding Whitney Houston’s estate highlights something that is both good and bad about the estate planning process – it is not over, even after it’s over (for you, that is).  When I started practicing law, I used to think that once a client died, his or her Will or Revocable Trust was “set in stone.”  I think that this idea gave me comfort that a client’s work, something that I helped to facilitate, would be implemented exactly as written.

This fairy tale is simply not a reality, and frankly, that’s okay.  Whitney Houston’s case is a modern example of changing a trust after the trust grantor is gone.  In that case, the trustees believe that the current payment schedule from the trust for Ms. Houston’s daughter, who is 19 years old, will be exposed to many outside influences to her detriment.  Therefore, the trustees want to alter the trust terms so that the intent of the trust, namely, providing for her daughter’s maintenance and support, can be accomplished long into the future.  The fear, it would seem, is that large payments could result in a waste of trust assets.

From this article, we really don’t have much information to really understand this case.  It does, however, remind us that one of the keys in administering a trust is to meet the grantor’s objectives (hopefully these are discernible from the language of the trust or by outside evidence).  Occasionally, the language of a trust cannot meet those objectives.  In Florida and in most states, trustees can petition a court that has jurisdiction over the trust to modify that language.

To make some sense of this, let’s imagine that you created a trust for your children that provides for their health, support and education until they reach age 25, at such time the trust assets are distributed to them.  When you created this trust, your children were typical teenagers who got into trouble every now and again, but nothing major.  After your death, imagine that a child becomes addicted to cocaine – at age 25, he will get access to all of his trust!  Wouldn’t it be helpful to change this trust so that the trustee can suspend or withhold distributions?

While you may not be a celebrity, if you have any assets to pass to loved ones (including life insurance), you should be comforted in knowing that your trustees may be able request a court modification of your trust after you are gone.  That way, unforeseen circumstances will not frustrate your personal and financial goals for your family.

Everything comes in Threes

Do you seem to find that things happen in “three’s”?  That seems to be the case in our office. The most recent instance involved our efforts to initiate probate proceedings for three separate estates. Florida law requires some form of proof that a Will was properly executed. The most common way to offer that proof is by signing an affidavit in the presence of a notary that the Will was executed by the testator and the witnesses.  If you have do not this type of affidavit, the statutes require one of the witnesses to testify before the clerk of court, or if they can’t be readily located, the nominated personal representative or disinterested person could provide that testimony.

Interestingly, in three separate and unrelated probate cases, each of the Wills had self proving affidavits that were signed correctly.  Specifically, the notary block was not complete.  In each case, the notary signed the affidavit that the testator and witnesses acknowledged signing the Will in his or her presence.

So far so good, but more is required when a document is executed in the presence of a notary. The notary must indicate whether those individuals are personally known to him or her, or indicate what type of identification was produced so that the notary can confirm who signature was being notarized.  Sadly, in these instances, the notary failed to indicate whether these persons were known to him or her, or produced any identification.

So what’s the consequence of this error?  In one case, we tracked down a local witness, who was able to offer testimony before the court. In other case, the witnesses were out-of-state, which means that additional pleadings were necessary to get the Will admitted to probate. In the third case, the nominated personal representative provided the testimony.  In all cases, a considerable delay resulted in the administration of the estates.

We suggest the next time you review your estate plan that you also make sure that it was executed and notarized properly.  If you’re not sure what that means, give us a call for a complementary review of your plan.

Short form probate can save time and money

After a client dies, we often meet with their families to review how their loved one’s assets will be distributed.  For those of our clients who use a revocable living trust as their primary estate planning vehicle, we hope to learn that all of their assets were either owned by their trust during lifetime or transferred to their trust by way of beneficiary designations at death.  If that holds true, then only modest legal work will be necessary to help our clients’ families.

Unfortunately, though, that is not always case. Sometimes a bank account is inadvertently left titled in a client’s name, or they purchase assets after they did their planning without remembering that they had a revocable trust.  When this happens, it is necessary to initiate a probate administration to transfer those assets to the client’s beneficiaries. In its simplest form, probate is a court supervised process involving the transfer of assets from a deceased person to that person’s beneficiaries.  Many people wish to avoid this process since it takes time and cost money.

Even the best plans can fall short.  Fortunately, Florida, like most states, has a small estate statute that helps clients who use revocable trusts.  This statute, referred to as “summary administration,” allows for a rather quick and efficient transfer of assets from a deceased person to that person’s beneficiaries (or their revocable trust) if those assets do not exceed $75,000. In other words, if a client titled all of her accounts in the name of her trust during lifetime, but forgot to retitle her checking account, that account can pass to the trust through summary administration if the balance is less than $75,000.  This same process would apply if a client’s total assets were below $75,000 and no other approach was used to avoid probate administration.

We are often asked when encountering situations if a client’s family can handle this process on their own.  Florida probate is a forms driven practice, which means that individuals not heavily involved in this process would likely not be able to efficiently handle this work. The good news, though, is that a summary administration can be relatively inexpensive if the family is in agreement and no significant claims from creditors must be satisfied.

Are you faced with this situation? Feel free to give us a call so that we can walk you through this process.