Clients often ask, “On my incapacity or death, how will my Successor Trustee know what we own in the Trust and those out of the Trust?”. The answer to this is UPDATED Schedules A & B, which are attachments to your Living Trust listing your assets such as IRAs, 401ks, life insurance, etc…
Clients should be consistently updating their Schedules when there are changes, i.e. closing/opening accounts, acquiring new property, etc.. For those confused between the difference between the two schedules, Schedule A lists all Trust assets, while Schedule B lists non-Trust assets. However, many clients fail to keep these schedules updated which can lead to calamities for the Successor Trustee.
We routinely provide Courtesy Calls to clients to determine if there have been changes in their family or estate. Most of the clients indicate there have been no changes. Subsequently, the children come in for a Trust Administration consultation after mom or dad has passed away and are shocked by the inability to determine what assets were in the estate.
(Continued from Establishing Trust Together Newsletter)
Many accounts or properties listed on Schedule A & B are no longer a part of the estate.What is worse we have heard children say, “Mom thought by listing them on the Schedule the assets were in the Trust.”
Many times the Successor Trustees must now head to the attic or garage to track down financial records stored for years in dusty boxes. Additionally, we are constantly preparing Small Estate Affidavits to obtain funds in checking accounts which were not title in the name of the Trust nor listed on the schedules.
Perhaps worst of all for the Executors of the estate is attempting to determine where the funds of retirement plans and life insurance policies are located. Do you know how many billions of dollars have been retained by insurance companies for unclaimed proceeds over the years?
If you are reading this article, I highly recommend you make an appointment for an update of your Estate Plan and assets inside and outside of the Trust. You will be surprised at what you discover, TRUST me. Aging Trusts can be harmful to your wealth.
Jack E. Stephens, J.D., LL.M.