Here’s a detailed explanation of what happens and the steps you might need to take:
1. Understanding the Issue
Trust Funding: For a trust to function properly, assets must be transferred into it. This process is called "funding the trust." If assets are not properly titled in the name of the trust, they are not legally part of the trust.
Pour-Over Will: Many estate plans include a pour-over will, which is designed to transfer any assets not already in the trust into the trust upon the decedent’s death. However, this process typically requires probate.
2. Impact on Probate
Probate Requirement: Assets not titled in the name of the trust will generally need to go through probate. The pour-over will directs these assets to be transferred to the trust, but the probate court oversees this process.
Probate Process: During probate, the court validates the will, inventories the decedent's assets, pays debts and taxes, and eventually distributes the remaining assets according to the will.
3. Steps to Address the Issue
Inventory the Assets
Identify Assets: Determine which assets were not titled in the name of the trust. This could include real estate, bank accounts, investment accounts, vehicles, and personal property.
Document Ownership: Gather documentation showing the decedent's ownership of these assets.
Probate the Pour-Over Will
File the Will: File the pour-over will with the probate court to initiate the probate process.
Petition for Probate: Submit a petition for probate, requesting the court to validate the will and appoint you as the executor if you haven’t been appointed already.
Transfer Assets to the Trust
Court Approval: Obtain court approval to transfer the assets to the trust as directed by the pour-over will.
Retitle Assets: Once you have court approval, retitle the assets in the name of the trust. This involves changing the ownership on titles and accounts to reflect the trust as the new owner.
Handle Administrative Tasks
Notify Beneficiaries: Inform the beneficiaries about the probate process and the steps being taken to transfer the assets to the trust.
Pay Debts and Taxes: Ensure any debts and taxes associated with the non-trust assets are paid from the estate before transferring the remaining assets to the trust.
4. Avoiding Future Issues
Comprehensive Review: Regularly review the trust and estate plan to ensure all intended assets are properly titled in the name of the trust.
Estate Planning Attorney: Work with an estate planning attorney to avoid future issues by ensuring that all assets are correctly transferred to the trust during the grantor's lifetime.
Summary of Steps
Identify and Inventory Assets: Determine which assets are not titled in the trust’s name and gather relevant documentation.
Initiate Probate: File the pour-over will with the probate court and submit a petition for probate.
Transfer Assets to Trust: Obtain court approval to transfer the assets to the trust and retitle them accordingly.
Communicate and Manage: Notify beneficiaries, pay debts and taxes, and ensure transparent communication throughout the process.
Example Scenario
If your father’s estate includes a bank account and a piece of real estate that were not titled in the name of the trust, here’s how you might proceed:
File the Pour-Over Will: Submit the will to the probate court and file a petition for probate.
Obtain Letters Testamentary: Once appointed as executor, obtain the necessary documents from the court giving you authority to act.
Retitle the Bank Account: Work with the bank to transfer the account into the trust’s name using the court documents.
Retitle the Real Estate: File a deed with the county recorder’s office transferring the real estate into the trust’s name, using the court-approved documents.
By following these steps, you can ensure that all of the decedent’s assets are properly managed and transferred to the trust as intended, even if they were not initially titled in the trust’s name. Working closely with an estate attorney throughout this process can provide additional guidance and help prevent any legal complications.