Greenville Estate Lawyer: “Faulty Estate Plan Scenario Number One”
December 7, 2009
“Why can’t I just take a copy of the Revocable Trust to the bank and have them give me the money in the account”, asks your client. “The trust says that I am the beneficiary.”
My answer to this is always the same. “In whose name is the bank account in right now? If the answer is that the bank account is in the name of the deceased person only, you have Faulty Estate Plan Scenario Number One.
A revocable trust only has an effect on assets that are titled in the trust’s name. If at death the account is in the name of the deceased person, upon death the account becomes an asset of the probate estate. This means a Last Will will have to be submitted to the Probate Court, or if there is no Will, an intestacy proceeding will have to be begun. No matter, the Will probably says that the bank account will go to the Revocable Trust anyway, but by not titling the account in the name of the Trust during the deceased person’s lifetime, you are forced to go through the extra step of a probate or intestacy proceeding.
The above scenario, which is not uncommon, obviously eliminates one of the more highly touted benefits of the Revocable Trust, which is avoiding the probate process. If you have a Revocable Trust in place, do not assume that your estate plan is airtight. A periodic review of your assets is a necessity in order for the trust to have its intended effect. If you desire, the attorney who drafts the Revocable Trust can help you with retitling assets in the name of the trust, or you can decide to use another attorney. Otherwise, you may end up with Faulty Estate Plan Scenario Number One.
December 7th, 2009 at 9:00 pm
See my post on Revocable Trusts here, where I discuss some of the uses of the revocable trust, their benefits, and yes, their drawbacks.