When you create a living trust or an estate plan, you go into it with the best of intentions, and never think that it may not work in the future. Pay attention to some of the following points and review your trust to see if you have any of these issues which create administration problems in your estate:
You made specific gifts of cash to cousin Jane, but did not consider that you only allocated real estate to the survivor’s share, and you also specifically gifted the real estate to cousin Joe. Because specific gifts get paid off the top of the trust, this means that your specific cash gifts will not get paid. To make sure that cousin Jane gets her specific gift, you must decide to either cash in the survivor’s trust, or indicate that upon your death, if there is no cash to pay that gift, it either is extinguished, or lapses, or you instruct your trustee to sell the real estate allocated to cousin Joe’s gift.
People often mistakenly believe that their life insurance will be paid according to the terms of the trust, but forget to change the beneficiary from an individual to a trust. This means that the individual beneficiary will get the entire life insurance, plus anything else you may have left him or her in the trust. If you don’t want there to be a double gift, check the beneficiaries of your life insurances often.
People who own valuable artwork, or guns have specific problems in their estate plans which can arise from the ownership of those assets. Artwork which does not have a provenance, and cannot be traced via purchase receipts, can create a situation for the trustee, where it can be deemed stolen art, or create liability for the trustee, if he or she states that it is by a certain artist, which cannot be verified. If you have valuable art, be sure to leave the receipts for its purchase in a folder in your safe, with specific instructions for your trustee, as to where and when you bought them.
Guns pose additional problems. Unregistered guns must be turned in to law enforcement within 30 days of death. You must register all of your guns, so that your executor or trustee, may re-register them after your death, so that they can be transferred according to law, via an FFL. Registration documentation should be kept in your safe with specific instructions as to which gun dealer your trustee should contact.
By: Mina Sirkin, Attorney, Board Certified in Estate Planning, Trust Law and Probate in Los Angeles County California. Ms. Sirkin frequently writes about estate planning issues and what may or may not work in your trust. Call our estate planning attorneys at 818.340.4479 or email us here.