Situation Where Revocable Living Trust Did Not Avoid Probate

I have been working with a nice family for several months now. Years ago, their parents went to a trust mill and had a revocable living trust prepared - they wanted to avoid probate and make things simple for themselves and their family.

At the time they established their trust, Dad was incapacitated. He had previously signed a hastily prepared Power of Attorney authorizing Mom to transact for him. Mom formed the Revocable Living Trust alone and signed over her interest in the family home to the trust. She used Dad's Power of Attorney to transfer his portion of the home to the trust. Both parents died. Here's what happened:

1. Mom had life insurance. However, she only listed the first names of her children as the beneficiaries of her life insurance. The life insurance company would only remit payment to her "Estate." Thus, we had to open a succession to enable an executor to access the funds payable to her estate. We had to get one of the children confirmed as the executor of her 1994 Last Will.
2. One of the children is trying to sell the family home as successor trustee of the trust. The buyer's closing attorney will not honor the power of attorney Mom used to transfer Dad's interest in the home to the trust. As far as the closing attorney is concerned, Dad's portion of the property is still in Dad's name. So we have to open a succession on Dad and have a child appointed as Independent Administrator so she can sell the property on behalf of his succession.
3. We discovered Mom did not transfer a separate piece of real estate to her trust. After Dad died, Mom bought a piece of real estate adjacent to her home, but she did not title it in the name of her trust. So, we had to go back and get daughter's appointment changed from executor to independent executor so she could sell this real estate without advertising requirements.
4. The trust terminated at death of the parents. The closing attorney was of the opinion that the parents' trust terminated when they died. So Mom's part of the home that was transferred to the trust had to be transferred out of the trust before the trust beneficiaries could sell it.

A properly prepared and properly funded revocable living trust can make it simpler to settle affairs after the death of a trust creator. One overlooked issue, however, can cause more trouble than the revocable living trust is worth.

Bottom line - if your goal is to avoid probate and make things simple for your heirs/beneficiaries, make sure your revocable living trust is prepared by someone who knows what they are doing - and just as important - make sure nothing is titled in your name at your death that would require a succession. This requires periodic review and maintenance on your part.

We can help. Feel free to give us a call at 225-329-2450, or send me an email at paul@rabalaislaw.com to get started or if you have questions.

Paul Rabalais

Comments

[David Butch]

Thank you for your information,

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