Source: http://protectyourestate365.com/blog/?s=
Timestamp: 2018-10-17 09:13:53
Document Index: 342007601

Matched Legal Cases: ['§16060', '§ 16062', 'art 5', '§ 16063', 'art 1', '§ 16069']

Blog ⋆ Protect Your Estate 365
December 7, 2017 /0 Comments/in blog 1, Living Trusts /by PYE365
WFB Legal Consulting, Inc.–A BEST ASSET PROTECTION Services Group–Lawyer for Business
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December 7, 2017 /0 Comments/in blog 3, Estate Planning, Living Trusts /by PYE365
PEOPLE INVOLVED IN A TRUST. Because trusts are not filed or recorded with any government agency, laws have been established to make sure that heirs and trust beneficiaries have some way to find out about a trust and its assets. The parties involved in a trust are typically the Trustors who set up the trust, the Trustees who administer the trust and the Beneficiaries who are the persons who are to receive assets and income from the trust.
STATE LAWS RE TRUST ACCOUNTING. The California probate code sections quoted below state the laws about providing accountings to trust beneficiaries. Generally, the trustee only has to provide the annual accounting to “each beneficiary to whom income or principal is required or authorized in the trustee’s discretion to be currently distributed.” The trust document has to be read and interpreted to determine who is entitled to accountings. Keep in mind however that the courts have been expanding the people who are entitled to a trust accounting so legal counsel should be consulted to determine whether an accounting is available. Especially if the trustee is refusing to account and/or claims that an accounting is not required.
WHAT DOES “ACCOUNTING” MEAN. The California probate code section 16063 quoted below has 6 separate types of data that have to be provided in an “accounting”. The law is pretty much a listing of common sense types of information needed to determine what is in a trust. The key items required are: a statement of receipts and disbursements; a statement of assets and liabilities; a statement of the trustee’s compensation; a description of the agents hired; and a statement that the recipient may petition the court for review and that such a petition must be within 3 years.
HOW OFTEN IS AN ACCOUNTING REQUIRED? The law requires an accounting to be done at least annually, at the termination of the trust, and upon a change of trustees.
EXCEPTIONS TO DUTY TO PROVIDE ACCOUNTING. The law does not require an accounting to any beneficiary of a revocable trust, for the period when the trust may be revoked. This can be a tricky area because the period when the trust may be revoked DOES NOT include the time when the Trustor is incompetent. Situations arise when a Trustor becomes mentally incompetent and a successor Trustee takes over. In that case the Trust cannot be revoked because a mentally incompetent person does not have legal capacity to revoke his trust and therefore an accounting is required.
DEATH OF FIRST SPOUSE SITUATION. A typical Trust formed by a married couple requires the trust to be divided up into “his half” and “her half” on the death of the first spouse to die. The portion of the first spouse to die becomes a permanent irrevocable trust. An accounting is then required for only the permanent irrevocable portion so that the beneficiaries (typically the children) know what is there and can keep watch on what will eventually be coming to them.
WHAT IF THE ACCOUNTING IS NOT PROVIDED? Beneficiaries who are entitled to receive a current accounting would need to make a written demand to the trustee if an accounting is not provided. If the accounting is not provided in the proper form as required by the law quoted below, then after 60 days the beneficiary can file a probate court petition (lawsuit) to get a court order requiring the trustee to prepare the proper accounting.
TYPICAL PROBLEM AREA. Trust accounting can be a source of disagreement and frustration to family members and surviving spouses because everyone wants to know what is in the trust and what they will get out of it. For example, in many typical living trusts established by a husband and wife, the trust provides that when the first spouse passes away that the trust stays in tact and the surviving spouse controls the entire trust and is entitled to income and principal distributions for the rest of his/her life. The children often are not to be given anything until both spouses pass away. However, since part of the trust becomes permanent on the death of the first spouse, the children would typically be entitled to an accounting. This can be especially annoying to children where one of the parents has died and the surviving parent is handling the entire trust and taking liberties with the trust assets and/or spending beyond what the trust allows. The children are understandably concerned that by the time the surviving parent has passed away the trust assets may have dwindled. These concerns also arise when there is a new spouse in the picture or if the surviving parent has health or mental problems or is subject to undue influence.
There is another law that allows beneficiaries to get some information short of a formal full accounting. If it is a clear-cut case where no annual accounting is required, the beneficiaries still have legal rights. California Probate Code §16060 provides as follows:
“Trustee’s general duty to report information to beneficiaries. The trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.”
This law has been interpreted by the courts to mean that the duty to provide information is independent of the duty to provide an accounting. The concept is that beneficiaries are entitled to obtain information reasonably necessary to enable them to enforce their rights under the trust. For example, in the trust example mentioned above where the children are not entitled to receive anything from the trust until after both parents have passed away, the children would still want to know what the trust assets are and how they are invested, etc. So, children in this situation would be legally entitled to demand specific information and the trustee would have to provide it. If information is not provided or if it is inadequate, the beneficiaries can file a probate court petition (lawsuit) to seek a court order for the trustee to provide the requested information.
Here are the California laws pertaining to a formal full trust accounting:
Cal Probate Code § 16062. Duty to account to beneficiaries
Except as otherwise provided in this section and in Section 16064, the trustee shall account at least annually, at the termination of the trust, and upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee’s discretion to be currently distributed.
A trustee of a living trust created by an instrument executed before July 1, 1987, is not subject to the duty to account provided by subdivision (a).
A trustee of a trust created by a will executed before July 1, 1987, is not subject to the duty to account provided by subdivision (a), except that if the trust is removed from continuing court jurisdiction pursuant to Article 2 (commencing with Section 17350) of Chapter 4 of Part 5, the duty to account provided by subdivision (a) applies to the trustee.
Except as provided in Section 16064, the duty of a trustee to account pursuant to former Section 1120.1a of the Probate Code (as repealed by Chapter 820 of the Statutes of 1986), under a trust created by a will executed before July 1, 1977, which has been removed from continuing court jurisdiction pursuant to former Section 1120.1a, continues to apply after July 1, 1987. The duty to account under former Section 1120.1a may be satisfied by furnishing an account that satisfies the requirements of Section 16063.
Any limitation or waiver in a trust instrument of the obligation to account is against public policy and shall be void as to any sole trustee who is either of the following:
A disqualified person as defined in Section 21350.5.
Described in subdivision (a) of Section 21380, but not described in Section 21382.
Cal Probate Code § 16063. Contents of account; Presentation
An account furnished pursuant to Section 16062 shall contain the following information:
A statement of receipts and disbursements of principal and income that have occurred during the last complete fiscal year of the trust or since the last account.
A statement of the assets and liabilities of the trust as of the end of the last complete fiscal year of the trust or as of the end of the period covered by the account.
The trustee’s compensation for the last complete fiscal year of the trust or since the last account.
The agents hired by the trustee, their relationship to the trustee, if any, and their compensation, for the last complete fiscal year of the trust or since the last account.
A statement that the recipient of the account may petition the court pursuant to Section 17200 to obtain a court review of the account and of the acts of the trustee.
A statement that claims against the trustee for breach of trust may not be made after the expiration of three years from the date the beneficiary receives an account or report disclosing facts giving rise to the claim.
All accounts filed to be approved by a court shall be presented in the manner provided in Chapter 4 (commencing with Section 1060) of Part 1 of Division 3.
Cal Probate Code § 16069. Exceptions to duty to account, provide terms of the trust or requested information
The trustee is not required to account to the beneficiary, provide the terms of the trust to a beneficiary, or provide requested information to the beneficiary pursuant to Section 16061, in any of the following circumstances:
In the case of a beneficiary of a revocable trust, as provided in Section 15800, for the period when the trust may be revoked.
If the beneficiary and the trustee are the same person.
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September 20, 2017 /0 Comments/in blog 3, Estate Planning, Living Trusts /by PYE365
CHANGING OWNERSHIP TO THE TRUST
When you transfer assets into a living trust you are changing legal ownership of your assets from your name to that of the trust. Most people create a living trust with themselves as trustee, so you will still be able to use and control your assets, but they will technically be owned by the trust. When funding a living trust, ownership will be transferred from you to (Your Name), Trustee of the (Your Name) Living Trust. Note that items in the trust will continue to use your Social Security number. Make a complete list of the assets you want to transfer so that you are sure you don’t leave anything out.
TRANSFERRING REAL PROPERTY TO YOUR TRUST
One of the largest assets most people own is their home and this is likely an asset you want to be sure to transfer into your trust. You can transfer your home (or any real property) to the trust with a deed transfer, a document that transfers ownership to the trust. A quitclaim deed is the simplest method, however a warranty deed may be preferred, since it ensures you have good title when you transfer it and makes it easier for your trust beneficiaries to sell at a later time. You will want to check with an attorney about which type of deed is best in your situation. Once the deed is prepared, a real estate deed transfer must be filed with your county and you will likely need to pay a filing fee.
A deed transfer should not affect your mortgage, even if you have a due on sale provision. You should check with your title insurance (if you have any). You may be able to simply transfer it to the trust, or your title insurance company may require that the trust buy a new policy. Once the deed is transferred, you will need to change your homeowner’s insurance to indicate the trust as owner of the property. If you receive a real estate tax exemption, you will want to make sure that is transferred and you may need to show documentation of the trust to the taxing authority, such as a certificate of trust (a document your attorney can create that certifies the existence of the trust).
DRIVE THE CHANGES HOME
If you would like to transfer ownership of your car or truck to your trust, you need to first determine if your state will allow a trust to hold ownership of a vehicle (check the DMV web site or consult your attorney). You also should call your insurance company to be certain they will continue coverage once the transfer is made. To transfer ownership, you will need to obtain a title change form from your DMV and complete it, naming the trustee (as trustee of your trust) as new owner. Sales tax should not apply to the transfer. If the clerk tries to apply it, you may need to speak to a supervisor. Note that owning a vehicle in the name of a trust can be detrimental if you are in an accident. The other person may assume you are wealthy if they realize your car is owned by a trust and sue. If you own a boat, you will need to follow a similar procedure to transfer title.
To transfer assets such as investments, bank accounts, or stock to your living trust, you will need to contact the institution and complete a form. You will likely need to provide a certificate of trust as well. You may want to keep your personal checking and savings account out of the trust for ease of use.
You likely own many things that you don’t have actual written titles or ownership documents for, such as jewelry, furniture, collectibles, and the miscellaneous things that fill your home. To place them in your living trust fund, you can name them in your trust document on a property schedule (basically a list you attach to the trust document that is referred to in the document) and indicate that their ownership is being transferred to the trust. If any of these items are insured, be sure to transfer the insurance to the name of the trust.
ITEMS NOT TO BE TRUSTED
There are some things that cannot or should not be placed in your trust. Individual Retirement Accounts (IRAs) cannot be owned by a trust, so these must remain in your own name. In some states life insurance policies cannot be owned by a trust, and if it is allowed it generally is not advisable since it may make the benefits taxable.
If you purchase or inherit items after you create the trust, you will need to transfer those items to the trust as soon as possible. If possible, when you purchase items, purchase them as trustee of the trust so they are automatically placed in the trust. To further protect yourself, you will want a pour over will. This last will and testament can be prepared by your attorney and will indicate that any items left in your name are transferred to the trust upon your death, so that your trust will be complete and provide all the benefits you intended.
Double check your list of assets to be certain you have moved them all to your trust. Ensuring that your living trust is properly funded will provide you with the protection you seek as well as the peace of mind that your affairs are in order.
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June 18, 2017 /0 Comments/in Living Trusts /by PYE365
A Trust Amendment is a legal document that changes specific provisions of a Revocable Living Trust but leaves all of the other provisions unchanged, while an Amendment and Restatement of Trust completely replaces and supersedes all of the provisions of the original Revocable Living Trust.
Understanding the Basics of Revocable Living Trusts
Before discussing when Trust Amendments or full Amendments and Restatements are required, you’ll need to understand what a Revocable Living Trust is – a legal contract between the Trust maker and Trustee that can be changed at any time and requires the Trustee to oversee the management of property transferred into the trust by the Trust maker for the benefit of the Beneficiary of the trust.
The key to a Revocable Living Trust is the fact that it’s revocable – meaning that at any time while the Trust maker is alive and competent the Trust maker can change, modify, update, or completely revoke the provisions of the trust agreement. Since this is the case, the name of the legal document that’s required to change, modify, or update the trust agreement is called a Trust Amendment and the legal document that’s required to revoke the trust agreement is called a Trust Revocation.
Contrast a Trust Amendment with a Trust Amendment and Restatement, which is a type of trust amendment that completely supersedes the terms of the original trust agreement. The name and date of your trust will stay the same (for more on this, see below), but each and every provision of the original agreement will be replaced by the terms of the restatement.
When Are Trust Amendments vs. Restatements Required?
While there aren’t really any written rules as to when an Amendment instead of a full Amendment and Restatement is required, the general rule is that if the changes that the Trust maker wants to make are minimal – adding or deleting specific bequests, changing who will serve as Successor Trustee, updating a beneficiary’s or Successor Trustee’s legal name due to marriage or divorce – then a simple Trust Amendment will cover these types of changes.
On the other hand, if the changes that the Trust maker wants to make are significant – adding a new spouse as a beneficiary, completely cutting out a beneficiary, changing from distributions to family members to distributions to charity or vice versa – then a complete Amendment and Restatement should be considered.
What if you’ve made a series of three or four simple Trust Amendments over the past 10-15 years and you want to make another change? Then consider consolidating all of your changes into a complete Amendment and Restatement – this will prove to be helpful to your Successor Trustee who will have a single document to follow instead of piecing together the provisions of four or five separate documents.
The Legalities of Trust Amendments
If you’re considering making a change to your Revocable Living Trust, don’t simply mark up your trust agreement and stick it back in the drawer. Why? Because a Trust Amendment must be signed with the same formalities as the original trust agreement, so your handwritten changes will, depending on applicable state law, either void the trust agreement or be ignored. Instead, ask your estate planning attorney to prepare the Trust Amendment for you so that it will be legally valid and binding on all of your beneficiaries.
Will the Name of Your Trust Change if You Amend or Restate It?
The answer is No – the nice thing about doing a Trust Amendment or an Amendment and Restatement is that the original name and date of your Revocable Living Trust will remain the same. That way, all of the hard work you put into funding your Revocable Living Trust under the original trust name and date won’t need to be undone.
Presented by WFB LEGAL CONSULTING, Inc.—Lawyer for Business. A BEST ASSET PROTECTION Services Group
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