17th Apr 2010
I am often asked to review and amend living trusts or family trusts that have been not been originally prepared by me.
Tragically, some of these turn out to be a “botched trust”. A “botched trust” is a trust that will ultimately fail when the creator or creators of the trust pass away. In other words, a “botched trust” is a worthless piece of paper.
The most common example is the “unfunded trust”. The person or couple has paid for a trust to be prepared, and they have signed it, but the all-important steps to fund the trust have not taken place. There is no probate avoidance, because the assets have not been titled in the name of the trust. The trust is unfunded.
An example of the worst type of “botched trust” was recently sent to me by a friend of mine. His elderly mother, who lived up North, had paid someone to prepare her living trust. Not only was it unfunded, it had never even been signed.
This “unexecuted trust” had been prepared, placed in a fancy notebook, and given to the elderly woman who put it away thinking she had a trust. Inside the notebook my friend and I discovered the original trust document with “sign here” stickers on the execution pages. This lady in fact had no trust, just papers she had paid someone for, because the person who sold her the trust had not even bothered to oversee her signing of the documents. And, of course, it was unfunded.
In every case where I come across unfunded trusts or unexecuted trusts, the trust was sold to the client by a non-lawyer. These individuals who peddle these botched trusts often use the title “Estate Planner”.
It is important to know there is a big difference between an “Estate Planner” and an Estate Planning Attorney! Only an attorney can lawfully provide legal advice. An attorney has to comply with certain standards of competence that a non-lawyer does not.
An attorney should never use the title Estate Planner, instead the title of attorney or lawyer should be clearly used.
The bottom line: Know who you are dealing with — If they are a lawyer, they will say so. If they are Estate Planner, know that you are not receiving competent legal advice, and you may be paying for a “botched trust”.
Please visit my website for more information about Living Trusts, Family Trusts, and Estate Planning:
DWIGHT EDWARD TOMPKINS
Attorney at Law
This blog is intended for informational purposes only, and is not intended as substitute for legal advice from a qualified attorney in your jurisdiction.