What to Do When Assets Are Not Fully Transferred to a Testamentary Trust

Your mother had a will setting up a testamentary trust, but she did not manage to transfer all of her assets to the trust before passing away. This situation can be complex and requires careful handling to ensure that the intentions as stated in her will are carried out properly. In this article, we will guide you through the necessary steps to resolve this issue.

Understanding the Concept of a Testamentary Trust

A testamentary trust is a type of trust that is established by a person's will and only comes into existence upon the person's death. The trust is designed to manage and distribute the deceased's assets according to the instructions specified in the will. In your case, your mother's will likely named a trustee and established the terms under which the trust would be administered.

Since the trust only comes into existence after your mother's death, it is not possible for her to complete the transfer of all assets into it while she is still alive. The trust account would be set up and assets can be added once the will has been executed and the trust formally established through probate proceedings.

Filing for Probate Action

The first step is to file a probate action for your mother's estate. This is a legal process in which the court validates her last will and testament and appoints someone (often a personal representative or executor) to oversee the distribution of her assets. After the probate process is completed, the assets in your mother's personal name can be transferred to the trust as per the instructions in her will.

Once the assets are transferred to the trust, they can be distributed to the ultimate beneficiaries according to the terms of the trust. However, any assets that are not transferred to the trust during probate will need to be handled separately and may need to go through the probate process.

Intestate Succession and Assets Outside the Trust

If your mother's assets that are not included in the trust need to go through probate, it is important to understand the concept of intestate succession. Intestate succession occurs when a person dies without a will, or with an insufficient will, and the court determines how their assets should be distributed according to the laws of the state where they resided.

In your case, even though your mother had a testamentary trust, if some assets were not sufficiently accounted for in the trust, it is possible they may need to go through the intestate succession process. This means that the court will decide how these assets should be distributed based on the state's laws of intestacy.

Contacting a Probate Attorney

To navigate the complex legal landscape of estate planning and testamentary trusts, it is crucial to consult with a probate attorney. A probate attorney can provide you with the guidance and support needed to ensure that the probate process is carried out smoothly and that your mother's wishes are fully honored.

They can assist you in:

Securing the probate action and appointing a personal representative or executor. Managing the transfer of assets to the trust during probate. Handling any assets that are not included in the trust. Ensuring compliance with state laws and regulations. Providing legal advice and representation in the probate court.

The Role of the Trustee

The trustee is responsible for managing the trust's assets in accordance with the trust agreement and the instructions provided in the will. If your mother designated you as the trustee, you will need to administer the trust. Your responsibilities include:

Opening a trust checking account, if necessary. Handling the distribution of assets as per the trust agreement. Managing investments and managing the trust's financial affairs. Keeping detailed records and maintaining transparency. Reporting to the beneficiaries and the court as required.

It's important to seek professional advice if you are faced with these responsibilities, especially if you have not already done so. An estates attorney can help you navigate these complex procedures and ensure that the trust is administered correctly.

No Such Thing as an “Intestate Will”

A commenter mentioned an “intestate will,” which is a term that is actually contradictory in meaning. An “intestate will” could be thought of as an oxymoron because:

Only individuals of legal age with testamentary capacity can create a valid will. When a person dies with a valid will, they are said to have died “testate,” meaning with a will. If a person dies without a will, they are said to have died “intestate,” meaning without a will.

There is no such thing as an intestate will; the term is not used or recognized in legal contexts. In the event that your mother did not have a will, the assets would be distributed according to the state's laws of intestacy, not an "intestate will."

Understanding the concepts of testamentary trusts, probate actions, and intestate succession is crucial for ensuring that your mother's estate is handled according to her wishes. Consulting with a probate attorney is highly recommended to navigate this complex legal process effectively.