Tales of Caution: Bad Revelations

Hi, everybody. Bridget Mackay here. This is my video blog. I’m an attorney in Petaluma, doing wills, trusts, probate, trust administration. Today, I want to talk to you a little bit about one of my Tales of Caution and this I’ve titled, “Bad Revelation”. This is a story about the importance of making sure assets get titled into your trust. I’m going to tell you a little story about Richard and Sarah. They were in their 50s and they diligently got their trust in order, went to an attorney, had it drawn up, and believed they were providing for their children. They carefully laid out their wishes and thoughtfully chose who their trustee was going to be, and about 10 years went by after they had finished the trust, they felt very comfortable and relieved that that was taken care of. In that 10 year time, Sarah’s mom and dad had passed away and she had inherited a house in Southern California.

The attorney there transferred… Her parent’s attorney when her parents had died had transferred that house into Sarah’s name, because in California, any property you inherit from someone is your separate property if you’re married. They rented that house for a couple of years, they made a good profit on it during that time, but sadly Sarah was diagnosed with cancer, she fought a tough battle, but she died about a year and a half later after being diagnosed.

The Southern California house was never transferred to Richard or into their trust, so that was Richard’s bad revelation. He was surprised to find out when he went to their attorney, who had drawn up their trust, and find that the house in Southern California that Sarah had inherited, that was in her name, didn’t automatically transfer to the trust. Instead, he had to go through a costly probate in court to transfer that house into the trust and inherit it. And even though they had done a trust together and Richard was the sole heir of that trust while he was alive, because Sarah never recorded a deed saying that the house was hers as trustee of their trust, which was about a $50 cost to record that at the county in Southern California, Richard ended up spending months in court and tens of thousands of dollars to transfer that house after Sarah’s death to himself and into their joint trust for their children.

So the moral of the story is, always review your assets in and out of your trust periodically, with a qualified attorney. They will be able to tell you if you have everything you need funded in your trust and if there is ever any event where you would inherit money or you would inherit property, always consult your qualified attorney about that and how it relates to your trust.

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