Missing a Step

I LIKE TO THINK my husband and I were savvy and careful when planning our estate. Yet anybody can make an occasional dumb mistake. That brings me to my next surprise in settling my husband’s affairs—and it came with an unfortunate legal bill.

As a couple, we’d established a revocable living trust at a young age, when death was a strictly theoretical idea. The trust eliminated the need for our estate to go through probate, not that I knew what that was at the time.

Ten years later, as it dawned on us that we had edged closer to the end of life, we reviewed our trust for changes in the law and in our finances. This process included updating financial accounts, so they’d roll into the trust, either immediately or on our deaths.

We’d decided on a trust based on our personal situation. Not everyone needs one. Shady characters try to sell them to people who don’t. Still, even if you don’t need a revocable living trust, you do need to ensure your house, retirement accounts and other assets are inherited according to your wishes. The process of establishing the beneficiaries for a financial account is typically simple.

After reviewing our trust, we dutifully mailed request letters to retitle accounts, so they’d be included in the trust. Some institutions immediately updated our accounts, while others responded with their own forms that needed to be signed and notarized, and then returned. Well, we were busy. With kids and work and life, those forms sat unattended, along with other important but not urgent paperwork.

After my husband died, I found these forms. Luckily, most accounts had been retitled and had named beneficiaries. But one personal account had no beneficiary named. Our legal work to ease the management of our estate was clouded by this one oversight.

Once again, I appreciated the value of working with our attorney, a calm, knowledgeable professional by training and practice. While I fretted, he got busy with the work of going to court to have this account added to the trust. The expense and delay could have been avoided had we followed through at the beginning.

What did I learn from settling my husband’s estate? Here are three takeaways:

1. You don’t necessarily need a trust to have a simplified process for transferring your estate’s assets. But you will need to make sure you name beneficiaries for all your retirement accounts, you own cars and real estate jointly with right of survivorship, and you set up regular taxable accounts so they transfer on death to your intended heirs.
2. Each state has its own process for handling the transfer of property after death. This includes case law to cover the inevitable snafus resulting from ordinary people either not planning or making mistakes in their planning. Possibly you’ll need legal assistance. State courts have web pages to help you, such as the one we have here in California.
3. As an estate’s executor or trustee, you carry out the known and written wishes of the deceased. This is not a time to settle scores with wayward relations or tamper with the deceased’s intentions, even if the situation gives you some power and latitude to do so. Oversights, slights or delays in settling an estate can sour family relations—permanently.

Catherine Horiuchi recently retired from the University of San Francisco’s School of Management, where she was an associate professor teaching graduate courses in public policy, public finance and government technology. This is the fifth article in a series. Catherine’s four earlier articles were At the End, The Aftermath, When It Rains and Muddling Through.

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