Dear Len & Rosie, In 1993, my late husband and I went to an attorney and requested a family trust be drawn up for our family. My husband and I owned stock in a large corporation, and in 1993 the stock was retitled in the name of my husband and I as trustees of our family trust.
A few weeks ago, I called the corporation to change my address and notified them that my husband is deceased. I asked them to remove his name from the stock certificate. They said they would send me a form to fill out and have my signature “medallion guaranteed,” and that I had to send the form, along with a certified copy of my husband’s death certificate, back to them. They also said I had to send the stock registered mail, insured at two percent of the stock’s value. My question is why? We had the trust drawn up to cover all of this. - Mary
Dear Mary, You have fallen victim to “the living trust myth.” You would be surprised how many others find themselves in the same situation. Many people believe that if they have a living trust drawn up, there will be no work to do when they die. This is simply not true.
After the death of one or both of the trustees, there is much to do. At the very least, title to all trust assets must be changed to remove your husband’s name as trustee. The corporation wants you to fill out their paperwork and get a medallion signature guarantee (available at your bank) because that’s what they always require to transfer stock certificates. You and your husband had to do the same thing when you put the stock into the trust. A broker can fill out all of the paperwork for you if you need help.
But there’s other paperwork too. You should record your husband’s death certificate with an affidavit of death of trustee to remove his name from the deed to your home. And there’s property tax paperwork that has to be submitted with the deed so you can avoid a property tax reassessment under Proposition 13. Most people do not know how to prepare these documents.
You should have your home and all of your securities appraised to establish a new cost basis so you’ll know how much capital gains tax you may have to pay should you sell your home or your corporate stock. Your trust may also be an A/B trust that requires a split between a survivor’s trust and a decedent’s trust on the death of the first spouse. If so, it is essential that you get everything appraised, prepare an accounting, and fund the B trust to help shelter your assets from federal estate tax upon your death.
A trust cannot relieve you of all of the administrative duties associated with the death of your spouse. This is why most people retain an attorney to help them with trust administration. This should not turn you off on the idea of having a trust. The real advantages of a trust is that it saves time and money. Assets held in a trust do not have to go through probate, which can take as long a nine to 15 months to complete if you are lucky, and attorney probate fees are always more expensive than fees for trust administration.
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway St., Sonoma, CA 95476, at 996-4505, or LenTillem .com. Len also answers legal questions each weekday, 3 to 4 p.m., on KKSF NewsTalk 910 AM. Call Len’s program at 866-LEN-1000.