In the world of estate planning, there's a concerning trend that we, at Bethel Law Corporation, have noticed—an increasing number of properties being removed from trusts and failing to be reinstated even after the passing of the owner. This situation can have severe consequences for your estate. In this blog article, we will explore the risks associated with properties taken out of trust and shed light on the potential probate nightmares that can ensue. By understanding these dangers, you can take proactive steps to protect your estate, save your heirs from unnecessary expenses, and ensure a smooth distribution of assets.

Procrastination: The Breeding Ground for Trouble

One common factor in properties being taken out of trust is procrastination. Many individuals are aware that their property is not in their trust but delay taking the necessary steps to rectify the situation. Unfortunately, this delay can lead to dire consequences. Over time, months turn into years, and before you know it, the property owner passes away, leaving the property outside of the trust.

The Implications of Not Having Your Property in Trust

The main danger of a property not being in trust upon the owner's passing is that it subjects the property and the entire estate to probate. Probate involves going to court and obtaining permission to distribute the property or put it back into the trust. This process can be time-consuming, expensive, and cause unnecessary stress for your heirs.

Read more: How to Settle an Estate in California | When is Probate Required?

Probate Triggers: Asset Value and Real Estate Ownership

In California, certain triggers determine whether an estate needs to go through probate. These triggers include assets exceeding a specific value (currently $166,250) and real estate that is not held in a trust but is solely owned by an individual. When an individual passes away and their property is not in a trust, probate becomes necessary to transfer ownership.

Refinancing and Trusts: Unveiling the Pitfalls

Refinancing a property or obtaining a reverse mortgage often requires temporarily taking the property out of the trust. While this may be a necessary step in the process, it is crucial to ensure that the property is promptly placed back into the trust once the transaction is complete. Failure to do so can lead to the property remaining outside of the trust, potentially triggering probate upon the owner's passing.

Real-Life Scenarios: Unraveling Probate Nightmares

Through real-life scenarios, we can understand the grave consequences of properties taken out of trust and left out. In one case, a couple refinanced their home and unintentionally failed to put it back into their trust. Years later, upon their passing, their children discovered the property was not in the trust, necessitating probate. Another scenario involves improper reintegration of the property into the trust, leading to partial inclusion and further complications.

Seeking Solutions: Navigating the Complexities

Two potential solutions to rectify trust issues are spousal petitions and Heggstad petitions. However, it's essential to note that these solutions have specific requirements and limitations, and they may not be applicable in all cases. Engaging the expertise of professionals in the field can help you navigate these complexities and find the best course of action for your unique circumstances.

The Financial Toll of Probate

Probate carries significant financial implications. Attorney fees, executor fees, and court fees can quickly accumulate, placing an additional burden on the estate. Opening a probate case in California incurs fees, and the overall costs can reach thousands of dollars.

Taking Proactive Measures to Safeguard Your Estate

To protect your estate from probate nightmares, it's crucial to ensure that your property is promptly placed back into your trust after any necessary transactions. Consulting professionals and verifying title can confirm the property's status and address any errors or omissions. By taking these proactive measures, you can save your heirs from the financial and emotional burden of probate and ensure a smooth transfer of assets.

Seeking Solutions: Navigating the Complexities

The dangers of properties taken out of trust and left out should not be underestimated. Procrastination, failing to put the property back into trust, and improper reintegration can lead to probate nightmares, causing delays, expenses, and unnecessary stress for your loved ones. By understanding the risks involved, seeking professional guidance, and taking proactive measures to safeguard your estate, you can ensure a seamless distribution of assets and provide peace of mind for yourself and your beneficiaries. Act now to protect your estate and avoid the pitfalls of probate.

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