by Peter Knize, J.D., LL.M., Sanibel Captiva Trust Co.
Trust Administration, Estate Settlement
We all know someone like “Captain Frank.” A combat engineer and war hero, Frank landed with General Douglas MacArthur on the shores of Korea in September of 1950. Grievously wounded, he was transferred stateside and spent six months recuperating. There he met Julie, his nurse. A wonderful marriage ensued.
Retiring to Tampa in 1976, Frank loved football and saw every home game of the Bucs’ abysmal first season. Quarterback Steve Spurrier’s 0-14 year led coach John McKay, after a bad loss, to quip: “We didn’t block real good, but we made up for it by not tackling.” Frank was less tactful. Every fall, like clockwork, Frank pulled out his Bucs jersey, adjusted the rabbit ear antennas, set up the neighborhood betting pool, and coordinated the tailgate parties—all with military precision. His army buddies always joked if they had to serve under Frank or General MacArthur, they would choose Frank. Julie wasn’t so sure.
Recently, Frank became terminally ill. Comforting him again these many decades later, Julie reminisced, alone. After his funeral, Julie’s sister took her to see the estate attorney. Everything was in order she was told. Julie was named sole beneficiary as well as Frank’s executor and trustee. A wave of relief—the first since Frank’s passing—came over Julie. The bills were mounting—the funeral, burial, hospital, mortgage, power, cable, credit cards—and the checking account was running low. Julie felt like there was no time to grieve.
“There’s just one thing,” the attorney told her. “A probate has to be opened to fund Frank’s trust. Then we can transfer the assets to you.” Herein lies Frank’s fumble: The investment and banking accounts, vehicles, even a timeshare, were still in Frank’s name. A Massachusetts house and farm, given to Frank after his mother’s death, were deeded in his name too. Because Frank never transferred (funded) those assets to his trust, a probate court was necessary to oversee the transfer.
In Julie’s case, this meant arduous delays. It took two months just for the court to appoint her as the Florida executor. Following the appointment, it took months longer to complete the transfer of the investment and banking accounts to Frank’s trust. During the interim, Julie was forced to withdraw funds from her IRA to keep the household going, causing adverse income tax liabilities.
Worse yet, Julie learned that in order to transfer the Massachusetts property to Frank’s trust, another probate process would have to be started… in Massachusetts! Months into the Massachusetts probate, the attorney found a title problem with the farm’s deed – which had to be resolved before the property was transferred to the trust. Julie was forced to file a contentious “quiet title” action against her brother-in-law to claim clear title. Months and thousands of dollars later, the property was properly, and finally, transferred to Frank’s trust. Both estates were closed. Julie was emotionally exhausted.
If your estate plan includes a revocable trust, avoid Frank’s funding fumble. Frank should have transferred his investment and banking accounts to his trust while alive and retitled assets in the name of the trust. Those simple steps would have saved Julie from months of nagging probate filings and hearings – and made the disbursement of Frank’s assets timely and seamless. Transferring the Massachusetts property to his trust while still alive would have prevented Julie from fighting to ensure Frank’s testamentary intentions.
When in doubt, sit down with our trust specialists and your legal advisors to make sure you avoid Frank’s funding fumble.
About The Sanibel Captiva Trust Company
The Sanibel Captiva Trust Company is an independent, privately held trust company with $2.3 billion in assets under management that provides family office and wealth management services, including investment management, trust administration and financial counsel to high net worth individuals, families, businesses, foundations and endowments. Founded in 2001 as a state-chartered independent trust company, the firm is focused on wealth management services that are absolute-return oriented. Each portfolio is separately managed and customized specifically to the client’s yield and cash-flow requirements. The Naples Trust Company and The Tampa Bay Trust Company are divisions of The Sanibel Captiva Trust Company. Offices in Sanibel-Captiva, Naples, Tampa, Belleair-Clearwater and Tarpon Springs. http://www.sancaptrustco.com