Do you have a family trust? Are you wondering, “Why? Who wants to know?” Well, I’m asking, because I hope you'll start thinking about it.
Everyone I know has a family trust. My parents have one, Marc and I have one, my friends and extended family all have one. So we’re covered, right? Maybe, maybe not.
Four years ago, we lost my stepfather. He and my mom had drawn up a family trust with a fellow Lions Club member, one of Ron’s peers who did estate planning. When Ron got sick, my mom called the attorney to get some clarification on their trust, but unfortunately, he was not available. He was a retired, sole-practitioner who was undergoing hip replacement surgery at the time. So there was no one to answer my mom’s questions.
In the wake of Ron’s passing, my mom had so much to take care of, and she needed help. I searched Yelp for an Estate Attorney and found Alex Varela in Placentia. She sat down with my mother and explained the contents of their trust, how the laws regarding estates had changed in the 12 years since it was written, and that due to Ron’s death, her trust was now irrevocable. The trust could no longer be updated or changed to accommodate new tax breaks for her or their estate. And there were some big money items that never made it into the trust.
Losing Ron was devastating for my mother. She was grief stricken and overwhelmed by her loss. She had health issues of her own and really could not summon the energy to take care of all the necessary paperwork that comes with death. And before she could get a handle on things, we lost her. Just three months later.
As a trustee of their trust, it was now up to me to figure it all out. The trust was easy. Everything that was in the trust could easily be disbursed to the beneficiaries. Their home was their biggest financial asset and it was safely and securely in the trust. Another incredible saving grace was that after Ron's death, my mom put me on her bank account, which was also in their trust. I was able to access funds for her funeral and to make repairs and updates to their home in preparation for selling it.
As I continued to sift through financial statements and policies, I found investments that never made it into the trust. No matter how many phone calls I made, no matter how many different representatives I spoke with, these investment funds could not be disbursed without going through probate. Probate is costly and takes years to process! That’s when I made my second call to Varela Law. Alex filed the paperwork through the courts and kept me updated on the process. Almost two years later, those assets were finally released.
Marc and I received a real quick lesson in making sure your family trust is up-to-date. Ours was written in 1997 and was sorely out-of-date! When we sat down with Alex to review it, we decided to have her completely rewrite it. It was a great opportunity to look at all our financial assets, clean up any documentation errors, and rethink how we’d like to provide for our beneficiaries. A lot can change in 23 years!!
Having gone through all of this with my mom and stepdad, I started talking real fast to my dad and stepmom. I shared with them some of the pitfalls I encountered, and strongly suggested they have their trust reviewed. They went to see Alex and, like us, ended up rewriting their trust. Again, a lot can change in a couple of decades! We lost my dad last year, and as awful as it was, the process for taking care of his affairs was not. My stepmom called Alex who guided her through every task and update.
I know it would have been so much easier for my mom if Alex had been the one to write her and Ron's trust. And, we would have avoided probate!
Finalizing my mom’s affairs gave me a huge education in how easily the paperwork can be processed when it’s in a trust, and how time consuming and frustrating it can be when it’s not. We set these trusts up to make it easier on our surviving loved ones. My new questions for you are, “Will it be easy for your trustee? Has your trust been reviewed in the past 3 years? Is it as you wish it to be?”
If you would like a refresher course on Estate Planning 101, let me know. I would love to set up a time and place for Alex to give us a little lesson on taking care of our assets once we’re gone. Are you in? Email me or give me a call and let me know.
So many good things to come,
Diana Cohen
REALTOR®
714-321-5822
DRE #02178808
Broker Affiliation: Realty Pro 100
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