Tom: Doug, go ahead.
Doug: Yes, my real question is, I recently had a loss in the family and he initially had a will, but then he kind of set that aside and put everything into a trust and we need to know what supersedes what?
Tom: Okay, first I need to ask you, who is he in regards to you?
Doug: He is my uncle.
Tom: And who is the executor or the personal representative as they call them now. Is it someone you know?
Doug: It’s myself and a family friend.
Tom: Right. Okay. Now when you said he had a trust and what did he have first?
Doug: He had the will first and then the trust.
Tom: Okay, because they can coexist. Are they conflicting?
Tom: In what way?
Doug: Dispersions to certain individuals that are deceased and as well, no longer family friends.
Tom: Okay, that’s what the will says?
Tom: And, then he? Go ahead.
Doug: The trust is downsized from what the will was.
Tom: Okay. So, he had a will and then he did a trust.
Tom: In the trust, by the way, just so people know, I’m going to let Blake talk because he’s the expert. Just so people know, they can coexist and often do. I mean a trust is to have property pass through because it’s an entity and it remains intact. Whereas a will just versus things that aren’t passed through and it’s in the estate. So, to answer your question, what supersedes what I have no idea.
Blake: Hey Tom.
Blake: First of all, Doug of my condolences on the passing of your uncle. In terms of which is going to rule, it depend on how the assets are titled. The trust will only dictate what happens to property that is in the name of the trust or when there’s a beneficiary designation or a beneficiary deed titling that property into the name of the trust. So, any assets that are owned by the trust, the bank account, will look if it’s in the name of the trust, those will be distributed in accordance with the terms of the trust. Any assets that were held in your uncle’s name and his name personally, those are going to be distributed under the terms of the will. So, yes, they can both coexist and they can both distribute property differently based on the ownership based on how the titling of the assets were set up.
Tom: Blake, I want to ask you something. Isn’t it true that many people go through all the trouble of setting up a trust but never actually fund it or transfer stuff and they’re very surprised toward the end of their lives that no one would get anything in that trust?
Blake: Oh, well they’re not the ones who are surprised, but it’s the family members who after the fact learned that mom or dad spent a few thousand dollars to set up his great estate plan and then mom and dad never followed through or the attorney setting up the plan never followed through to fund the trust. So, it’s very common that individuals set up a trust for the purposes of avoiding probate than miss the very important step of funding the trust, which sounds like may have been the situations in your uncle’s case that he set up this trust. One for certain beneficiaries to receive certain assets, but if he never funded that trust, then those assets are not going to be distributed from under the terms of the trust.
Blake: However, something to watch out for when somebody creates a trust, it’s pretty standard to sign a new will as well, what’s called a…will which transfers all the property that is still in that individual’s name into the trust at the time of passing. So, if you have a new trust, maybe check with the law firm that created that and see if there’s also they simple will that was created at the same time. In which case the ultimate distribution would be the terms that are in the trust.
Tom: So, Doug, first and foremost okay? Do you have a copy of the trust?
Doug: Yes I do.
Tom: And, does the trust actually own? Because, remember probate is for stuff to be retitled. It’s not necessarily for a bank account that automatically goes into someone’s name or sometimes real estate has a beneficiary will or there’s artwork that doesn’t have title work to it. It doesn’t necessarily require probate does it, Blake? Does all property require probate?
Blake: No, not all property has to go through probate. Certainly in the name of a trust it does not need to go through probate.
Tom: What I mean is anything that is, for example, that doesn’t require a change in title. Does that require probate?
Blake: Correct. Anything they did not require change in title, title, does not require probate or if the total assets and individual owner when they passed away, were less than $64,000 and there was no real estate. If there was any real estate holding in someone’s name then that would require a probate. But, if an individual has less than $64,000 and tenable personal property money in the bank account, that can also be completed with the small estate affidavit.
Tom: What if there is more?
Blake: [crosstalk 00:05:34] individuals name. Oh, go ahead.
Tom: What if there is more than 64,000 in property? Not titled property, but just miscellaneous property that must go through probate if there’s no other means?
Blake: Then technically, yes. According to Colorado law that may go to probate. I will say some of estates get handled without it officially going through probate and a beneficiary, the heirs who do that, they do risk a little bit of liability. So, if you have more than $64,000 in assets from the state, go through the probate court so that there’s no remaining liabilities for the beneficiaries who are receiving the inheritance.
Tom: Now to Doug’s question or to Doug’s information. Doug, do you know what the trusts or what the trust owns?
Doug: At this point, I don’t.
Tom: What should he do Blake?
Blake: Find out what real estate your uncle owned and then pull a deed for that property. That deed will tell you the name of the owner of that property, and then you can determine whether you can distribute the property under the terms of the will or the terms of the trust.
Tom: So, you go to all the property that’s titled Doug.
Tom: And, all the property that is titled will name the owner. You’d go to the real estate, you go to the car, you go to whatever, you go to bank accounts, but I want to know something else, Blake. What about stuff that doesn’t carry a title? How would I transfer, for example, my art collection or my jewelry or something else? How would I transfer that into the trust?
Blake: So, of course you need to make sure that there’s no separate personal property memorandum. The Colorado law allows for an individual, after they’ve signed a will, to sign a separate personal property memorandum, which dictate who receives what tangible items. And, that does not have to be in the will, that does not have to be in the trust. They can just simply be referenced in the will or the trust. So, I would look for the personal property memorandum that there is no personal property memorandum. Then you look for the residuary estate that says where the remaining property is distributed. And, then at that time when you distribute property to an individual, you’ll have them sign off on some type of relief where they acknowledged that they received the uncle’s watch or a car or item of tangible item from an estate or a trust.
Tom: But, in my lifetime, right now, if I have a trust, can I simply write a note that transfers that personal property into the trust? I’m not talking about real estate or titled property, but I’m talking about some, like the watch for example. I can write a memorandum saying “this goes to my trust.”
Blake: Yes, absolutely. And, when you sign a trust, you should fund the trust. And, the way to fund the trust and there’s only three things you need to know, 90% of people need to know about funding. Number one, transfer the home like a deed. Number two, update beneficiary designation to retitle financial accounts. And, then number three, and this is what you were talking about Tom, for tangible items, sign an assignment of personal property, assigning a personal property to be owned by the trust. That way when you pass away, there’s no issue of should this property need to go through probate. You’ll know that it’s all owned by the trust. And, then the trustee can take over without any court intervention and distributing those personal items.
Tom: Okay. So, Doug, do you have any specific questions? I think he’s given you a lot of information.
Doug: Right, right. But this point, maybe you can just give me Blake’s number and we can talk off air?
Tom: I will.
Tom: Yes, I was just going to ask Blake, Blake, when someone a sudden need and they simply need advice, do you do consultations and retainers for people? They may have already, it’s too late. The estates, they’re right now facing someone who died and they don’t know what to do. Do you do that kind of work as well?
Blake: Yes, absolutely. And, I always start with a free initial consultation.
Tom: All right, so his number, Doug, if you’re ready, is 7-2-0-9-2-4-6-1-7-1.
Doug: Okay. Thank you very much.
Tom: All right. Thank you for calling, Doug and let us know. You can call back. It’s not just a onetime thing, all right?
Tom: 3-0-3-7-1-3-TALK is our number and Suzanne, let’s work on.