Wednesday, August 17, 2016

Cautionary Tale: Father Has Dementia; Living Trust MIA



A client recently came into our Oakland office seeking our advice. His father was 82, in a nursing home after suffering several strokes, and now in the early stages of dementia. He had always assured his family that he set up a Living Trust for himself and his wife, our client’s mother, who is also in failing health. Our client recognizes that there is some immediacy, and while he’d been going through the chaos of his father’s papers looking for the Trust. he could find only unsigned copies of the document.
His mother knows nothing about where his father might have put the signed legal document, but for whatever reason, she doesn’t believe a lawyer was involved. Our client is worried about what will happen when his father dies. If the Trust is not found, his father’s estate will be subject to Probate.

His questions to us were those that we frequently field:

Q: Are Living Trusts recorded somewhere?
A: Unlike Deeds that are recorded with the county clerk, Living Trusts aren’t recorded anywhere. It’s up to each individual to store his/her Trust in a secure place and make sure that a family member has access.
  1. Can the father sign the copies of the Living Trust? 
  2. The father can’t sign the copies or have a new Trust created if he’s not mentally competent. At this point, with the strokes and the dementia, it’s likely that he would be declared legally incompetent. If he can’t find a copy of it, and if the assets, such as the house, weren’t transferred into the name of the Trust, he can’t use the unsigned copies to avoid probate. Like the tree falling in the forest—if no one can find the Trust, it doesn’t exist.
  3. Can the mother set up a new Living Trust? 
  4. While Living Trusts aren’t filed anywhere, Deeds are, and you can check who owns the title to a home. The house may be able to avoid Probate if it’s titled in joint tenancy. If the father dies first, the mother will inherit it; she could then create a Living Trust of her own, thereby avoiding Probate for her son when she dies.
  5. They don’t have a lot of assets–just a house and car—is our client worrying needlessly?
  6. A. It’s worth putting some effort into this search. A house in the Bay Area is a significant asset.

A few other ideas for tracking down missing legal documents

  • Check papers for bank statements—the father might have had a safe deposit box there.
  • Time to put on your private investigator hat–the Living Trust may be carefully hidden somewhere in the house. Heirs have found documents hidden in freezers, taped to attic rafters, tucked under mattresses and floorboards and slipped behind the mats of framed pictures. Think of places that are secure and dry, that would be undiscovered.
  • Review a checkbook around the period when the documents were created, if possible. If a check was made out to an attorney during that time, the signed document may have been filed with him/her.

A cautionary tale; situations like this happen more often than we’d like

When our clients create a Living Trust, they receive both hard and soft copies. We also take a scan of every signed Trust. We advise them to update this periodically with important life events—births, deaths, divorce and important investments. These documents should be kept in a safe place. Home safes are popular these days, but for them to be secure, they should be difficult to move, fireproof and waterproof. Safe deposit boxes may be a good option as well, but for each of these storage solutions, it’s critical that a trusted family member or friend has access to them.
Do you and your heirs know the whereabouts of your Living Trust? Does it need to be updated with important life events? Call the California Document Preparers team today to make an appointment.

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