What can a trustee of a revocable trust do to access assets? NEED ANSWER FAST

In My Humble Opinion
1

From the MAY we have a new mini-rants thread now:

With respect to the above post, I have some questions suited for IMHO.

In February, the two of us bought cremation services from the Trident Society (Neptune Society everywhere except Orange and San Diego counties). We bought them on pay-$50-a-month-for five-years plans, with the monthly payments automatically coming from our individual checking accounts.

I called them today to notify them of their latest client’s passing, and while I was on the phone, I asked about payment of the balance of the contract. They told me that the balance must be paid in full.

Joan had a revocable trust drawn up several years ago, but I don’t know what assets, if any other than her house, are covered by it. The trustee is tho woman who’s been Joan’s caregiver for the past six years. I trust her implicitly, but even she acknowledges that when it comes to law-related things, she’s out of her depth. She’s trying to get hold of a lawyer as I type, to find out if her position gives her authority to write a check on Joan’s checking account to cover that balance (about $2900) immediately.

Meanwhile, she texted me to ask me if I could access Joan’s account online and make the payment. While I DO have the ability to access her checking account, and there ARE sufficient funds to cover the balance, I texted back that I would be concerned that to do so would constitute fraud.

So, bearing in mind that we’re subject to the laws of the state of California, and that none of you are my lawyer, does anyone have a definitive answer to the question of: can the money in Joan’s checking account be used to pay the Trident Society before the time comes for the coroner’s office to release the body? *

*That will be in a few days, following an autopsy.

TIA

2

I’m sorry to hear about your loss.

The trustee should have the trust document (generally called a trust agreement in the United States) which should spell out all assets that are covered in the trust. The trustor generally does not include fungible assets such as personal bank accounts for obvious reasons, so it is likely that the trustee does not have authority over that account. You are almost certainly correct that writing a check on Joan’s account would constitute fraud even if it were in the trust because the asset can only be dispersed by the trustee or (an official designate in the case of auction or sale), notwithstanding that you could not legally forge a signature; you could only access the funds after they have been dispersed to you or if you have power of attorney covering the deceased personal finances. The trustee does not have any specific obligations toward the disposition of funeral arrangements although the trustor may have left certain instructions regarding the use of funds within the trust to cover that and other expenses.

Just as a point of note, a revocable living trust (generally) converts to an irrevocable trust upon the death of the trustor. I say generally because there is probably some kind of weird edge case where this doesn’t happen automatically but without the trustor there is no legal entity to revoke the trust agreement, and the trustee then has plenary authority over the assets in the trust.

I have read pretty extensively on revocable trusts but I am not a lawyer, obviously not your lawyer, and you should consult with an estate attorney regarding interpretation of the trust agreement and what obligations and authority the trustee has over the assets in trust. Until you and she do so, you should not withdrawal anything from the trust or liquidate any non-jointly owned assets, nor make any commitments about reimbursement from the trust or estate. Sorry that this probably puts you in a pickle but I hope you find a way to work this out with a minimum of additional trouble and grief.

Stranger

3

Did the caregiver have the ability to write checks on the account prior to Joan’s passing? If so, then she should be able to write the check. If the caregiver did not, then the bank may have issues.

In my experience, I was co-trustee on my parents trust, and almost all of their assets were in the trust. Before their passing I was added as a co-trustee on those accounts. That took some time though (most things with trusts do). I’m not sure if I would have been able to do so quickly if I wasn’t on those accounts when they passed. That said, paying for reasonable funeral services are high on the list of acceptable use of estate funds.

Did Joan have a will in addition to the trust?

My condolences, dealing with this type of stuff is the last thing you need right now. Hopefully the Trustee will have good news

4

Okay, couple things:

I’m going to start referring to the caregiver/Trustee as “Brenda” (because that’s her name). Brenda handled Joan’s correspondence, including writing checks, but always with Joan sitting at the table, and she signed the checks with Joan’s signature stamp. It’s unclear to me if the trust lists the checking account among her assets (although, from what Stranger_On_A_Train said, I tend to doubt it).

Brenda DID speak with a lawyer (who wants $200 for the conversation, which I don’t object to), and per a text she sent me “she said I could write a check from Joan’s [account]”. Meanwhile, one of my brothers called to offer condolences, and I told him about the issue. After consulting with his wife, he agreed to Zelle me the money, and I’ll pay him back $500/pay period, so even if Brenda can’t access the funds, we’ll have Trident paid off.

That said, Brenda’s coming over this afternoon to write a check to the lawyer. I’m going to confirm that the lawyer was speaking from authority when she said Brenda could still write checks, and if I’m not comfortable with it, I’ll write her a check myself (for one thing, I can’t imagine it being kosher to use Joan’s signature stamp two days after she died, and having Brenda sign her own name might not fly). But I need Brenda here today, anyway, because she’ll know about all of the recurring payments that will need to be cancelled.

5

Since you have access to the checking account, do you have a recent statement? If it’s in the trust, the name the account is under should reflect that. In my case, accounts were named ‘Dag Otto’s parents Trust’ or ‘Dag Otto trustee under agreement (date of trust)’. If it’s not in the trust, the I would think that state probate rules would apply.

6

It’s not clear who the lawyer is, but I would suggest that she go to the lawyer who wrote the trust. In my case, the law firm that my parents used was quite helpful when I asked them questions, and also did a few other things such as sending death certificates to the county and applying for the EIN for the trust. All for no fee. Your (well, Brenda’s) mileage may vary, but I suggest starting there.

You also stated in another thread that the house was possibly the only asset in the trust. Brenda will need some cash to pay for ongoing expenses until the house is sold (utilities, maintenance, and possibly insurance and property taxes if they are due in the near future). Another question for the lawyer on how that works.

7

Thanks. She has an appointment with that lawyer next Tuesday afternoon. One of the orders of business is going to be for Brenda to resign as trustee, in favor of Joan’s niece, who is named as the alternate trustee in the trust document. The hitch there is that the niece has since moved 450 miles away. Brenda and Joan’s remaining sister want to make the remote niece AND another niece, who has remained local, to take over as co-executors. Not sure if that’s possible, as the local niece isn’t named in the trust document.

But since (AIUI) the remote niece cannot be compelled to act as trustee, SOMOEBODY’S going to have to do it, if the remote niece should demur. I have no idea how that shakes out. I guess we’ll find out next Tuesday.

Property taxes don’t need to be paid again until October or November, and I’m the one who bought the home insurance policy last month. I’m also capable of paying the utility bills when they come in the mail.

8

One last thought regarding the house is determining the current value for cost basis purposes. The house has probably increased in value since 2016.

My parents had five properties, and I had thought that that getting a market analysis from a realtor was sufficient for this, only to be told by the CPA doing the taxes that an appraisal was needed. So another possible expense, if this applies to your situation. More of a question for a tax professional than a lawyer.

9

It was reappraised twice last month, in preparation for obtaining a new reverse mortgage (which now isn’t going to happen). Both appraisals were consistent with one another.

10

As far as I am aware (and again, not a lawyer, just reasonably well-read on the topic) the trust cannot be transferred to a trustee who is not named in the document. At that point, the current trustee would have to dissolve the trust and dispense with assets (transfer or sell), or potentially put them into another trust but that would just be kicking the can down the road. Generally speaking the point of a revocable living trust is to facilitate the transfer of assets without having to go through probate, and a lawyer should either be able to handle that or refer you to someone who can in the case of retitling a house or transferring a deed. There is really no reason to maintain the trust beyond dispensing the assets.

Stranger

11

Sorry for the multiple replies, but if the nephew is the sole beneficiary, is he old enough and capable to act as the trustee? Unless he is a minor or not comfortable with this type of work, it seems that he would be the most motivated to take on the job.

12

I’m getting close to oversharing my family’s drama, but the nephew is 49 years old and CP has had him confined to a wheelchair since about the time his mother died in 1989. Joan vowed to his mother on her deathbed that she would always look after him and see to it that he has what he needs (and I vowed to Joan that if she passed before I did that I would take up that torch). He requires a full-time caregiver for everything from eating to dressing to getting into a bed. That said, he’s no simpleton, has a degree, and hung his shingle out as a life coach a few years ago.

13

Moot. The trust is no longer revocable.

14

Thanks to all for the replies I’ve gotten so far. Here comes another question: Joan has been receiving a monthly benefit payment from the Social Security administration for several years. Her niece, who is acting as the trustee, tells me that the cremation people will be notifying the SSA of her death, and that’s to her knowledge, neither she nor I have the ability to notify SSA any sooner than the trident society does. In the event that they don’t notify them in time to stop the June direct deposit to her checking account, is the Social Security administration going to aggressively try to recover those funds? And by “aggressively,” I’m asking how quickly will they be coming after it.

Again, TIA.

15

Keep careful records:

Stranger

16

First, I’m so sorry you are going through this. Now, with all the usual caveats of IANAL, when my mother passed away in 2013 one of the first things I did was phone Social Security to stop payments. Since that was nearly 10 years my memory could easily be wrong, but as I recall it was really straightforward: I called, her SS number in hand, and that was about all I had to do. Perhaps I had to send them a copy of her death certificate, but I don’t even remember needing to do that.

Whatever details I may misremember, I am 95% certain I personally made the notification by phone. I really don’t think it was the funeral home where she was cremated that did it.

17

There’s no need to notify the SSA.
They know about it as soon as a death certificate is created (as do banks and credit card companies).

18

While that’s somewhat reassuring, if the death certificate doesn’t reach. SSA before the June benefit hits her bank, the trust could conceivably be on the hook for $10K (based on what the linked article says), which just isn’t readily available.

I’m going to show the article to my niece, and suggest that she consult the lawyer (and get the lawyer’s advice in writing).

19

The trust, which is no longer a part of the deceased’s estate, is not on the hook but the SSA could potentially go after other assets. Better to just make sure that the SSA has been informed. I’m sure in the era of electronic records the SSA has numerous ways of being informed but it does no harm whatsoever to notify them and then you have it on record that any error is on their part rather than oversight or malfeasance on yours.

Stranger

20

Point taken. I’d prefer not be seen as stepping on her toes, though.