What Do I Put In a Living Trust?
What Do I Put In a Living Trust?
By Liza Weiman Hanks
NABBW’s Estate Planning Expert
Dear Liza: I am trying to prepare a living trust on behalf of my father. He owns his home and vehicles outright and also has two bank accounts. I am the POD beneficiary of all of his accounts, as well as being a secondary signer on his checking and savings accounts. My confusion comes from not knowing what assets should be put in the living trust. Should it just be the home, since that has the highest value? Or should the cars and bank accounts also be included? Or can everything but the house be designated in the pour-over will that I also intend to create?
Your father’s living trust has just one purpose: to allow his estate to avoid probate upon his death. If your father’s assets are owned by the trust, not by him, when he dies, then his estate won’t need to go through probate. Not all items are subject to probate, though: retirement accounts, life insurance policies and bank accounts with designated beneficiaries (that’s what a POD account is), go directly to the named beneficiary. Cars can be transferred via the DMV, and so don’t need to go through probate either. So, for your Dad, that leaves his house. You should transfer legal ownership of the house to his trust by filing a trust transfer deed with the county. When you record the deed, you’ll also need to file a Preliminary Change of Ownership Form (PCOR). This form tells the county assessor what kind of transfer just happened; the assessor wants to know if they can raise property taxes on that property, which they can’t, because a transfer to or from a living trust is NOT a change of ownership under Proposition 13. That pour-over Will is just a backup for your Dad. If he doesn’t transfer his house to the trust, and then dies, the Will says transfer whatever property he owned at death to this trust (that’s the pour-over part). But, if the value of that property is more than $150,000, you’ll need to go through probate to make the transfer. Put another way, the Will makes sure that all of your father’s assets get distributed as directed by the trust, but it won’t help his estate avoid probate first.
Liza Weiman Hanks is an attorney who specializes in estate planning for families of all ages. She is a Certified Specialist in Estate Planning, Trust, and Probate Law by the State Bar of California Board of Legal Specialization. A graduate of Stanford Law School, she has also served as an instructor at the Santa Clara University Law School and practiced with the state of California and a prestigious Silicon Valley firm. Liza is also the author of The Mom\’s Guide to Wills and Estate Planning and The Trustee\’s Legal Companion. She lives with her family in Campbell, California.
I just want to say Thank You, Ms. Liza, on behalf of every confused beneficiary out here. I only wish I’d found your site four years ago! I’ve spent countless hours of legal research defending my son’s and my interests in my mother’s trust which inadvertently wound up in the clutches of my crooked and greedy brother, who is now sole Trustee. He usurped all of mother’s property, from the house in Pebble Beach to all of MY heirlooms, all the cash, and his fraud and self dealing (I think) make that described in Rothko and Hansen pale by comparison. My brother’s has got to be legendary. Right now, I have to have set aside a Disbursement Agreement he obtained by more fraud, misrep’n, undue influence and coercion in order to avoid further adverse rulings against him and liability for all of the prior fraud and illegalities. I’m afraid his shenanigans just may have been sufficient to cause my son and I irreparable harm, however, because I’ve been on my own (I live in Hawaii), and I’m poor, and by the hand of the devil there was a change in judges JUST when my brother was about to be found in contempt for refusing to comply with a discovery order that vexed the first judge so much he threatened to suspend his powers right then (“then” was in May of 2013).
Liza, my story about my brother the crooked trustee is so long it’s become a saga. I cannot begin to sum it up here. He’s become a multi-millionaire at the expense of my son and me (I’m disabled and have only SSDI for income). His fraud has got to be legendary.
Do you ever call people? Please let me know. Mahalo plenty!
Oh, I do have one relatively simple question: my brother took out a loan using the trust’s house as collateral. That loan was from a couple in Santa Cruz named Hannan. Then a Tedrowe Realty recorded a Request for Notice. In the accountings, he reports paying Tedrowe Realty, not the Hannans. My gut is telling me Hannans sold their deed of trust and assignment of rents to Tedrowe. How can I know for sure?
Also, then am I right in arguing that my mother’s estate (all the very valuable antiques and fine art, of which 1/3 is mine but he’s essentially stolen and tried to conceal) should have been probated, and could not escape probate just because he filed a Heggstad Petition to transfer title of the house to the trust (never mentioning any personal property in that petition, and after failing to lodge the Will with the Court in Monterey)?