Funding your revocable trust is vital to proper estate planning. Failure to do so may result in a rocky road in the years to come. For example, in one recent appellate case, Carne v. Worthington, the court considered whether the trustor had transferred real property from trust he created in 1985 into a newer trust that he created in 2009.
In 2009, the trustor executed the new trust instrument that read, “I transfer to my Trustee the property listed in Schedule A, attached to this agreement.” That attachment listed one property by its legal address. Although many people would think that this statement was sufficient, the trustor’s grandson challenged the transfer of real property because his rights were different under the 2009 instrument as compared to the 1985 instrument, meaning that his share of the estate would be different if the property was in fact transferred to the 2009 trust. The grandson argued that the trustor failed to validly transfer the real estate to the 2009 trust and the trial court agreed. On appeal, however, the appellate court reversed.
Since Estate of Heggstad (1993) 16 Cal. App. 4th 943, California courts have generally signaled that they prefer to take a more pragmatic approach to dealing with ownership disputes resulting from shoddy trust funding. Although the court ultimately cured the funding defect in this case, the headaches, attorneys’ fees, and unrest involved in trust litigation could have been avoided with proper trust funding.
If you’ve never re-titled a valuable asset (e.g., certain real estate, bank accounts, brokerage accounts) after your revocable trust was created, call us today to ensure your revocable trust is up-to-date and properly funded.
Ariel Bedell is a Shareholder at The Loftin Firm. For questions relating to any other California real estate, corporate governance, land use, or estate planning matter, contact Ms. Bedell at 760-814-9649.