Your father, Bob Smith, passes away, and while you are going through his papers you come across a deed transferring property to “Bob Smith, Trustee of the Smith Family Trust.” Trouble is, you have never heard of “the Smith Family Trust.”
You spend the next several days unsuccessfully searching the house, the safety deposit box and the storage shed looking for an original or copy of the Smith Family Trust.
You cleverly think about contacting your father’s lawyer to see if he has a copy of the trust. That is a literal dead end; you discover the lawyer died a decade ago and no one knows what happened to his files.
You search the deed records at the county courthouse. You can confirm that the deed is valid, and that the property was transferred into the trust, but there is nothing else about the trust that has been filed – certainly not a copy of the trust or even a Certificate of Trust (a short writing confirming the trust exists and Bob Smith is the trustee). The title company that prepared the deed is no longer in business. You have no idea where to find the seller of the property to see if he knows anything about the trust.
You officially have a missing trust. You can’t afford to ignore the situation because there is at least one asset – the land – in the trust. The land cannot be managed, sold, mortgaged, or leased without the signature of a trustee. You can’t have a trustee without knowing the terms of the trust. It’s one big circle with the missing trust at the center.
Missing Trust Solutions
There are a few possible solutions to your problem. All of them require you to hire a knowledgeable lawyer and file suit.
The first solution is the most popular: file a lawsuit asking the judge to issue a judgment declaring the terms of the missing trust. This is a possibility if you can produce any evidence that shows the terms of the trust. It could be notes about the trust, an unsigned draft, or testimony from someone who saw the original trust. You must also prove that a search was made for the trust and it could not be found.
If you do not have enough evidence to show the terms of the trust, the next solution is to ask the Judge to modify or terminate the trust. If you are going to request a termination, then all the trust beneficiaries must consent.
How, you ask, do you identify the beneficiaries of a missing trust? You will need to convince the Judge through circumstantial evidence. For example, if your father Bob Smith identified the members of his “family” in his will, then you would have a very good argument that the beneficiaries of your father’s “Smith Family Trust” were the same family members.
You could also ask the Judge to restate the terms of the trust. This is basically rewriting the entire trust, based upon how it would have made sense for the trust to be structured.
The final alternative is to ask the Judge to declare the trust void and allow the trust assets to pass via your dad’s will.
None of these solutions are easy or cheap.
If you have a trust, give a copy to your successor trustee. Put the original in your safety deposit box. Scan the trust and save it to your computer. Tell your beneficiaries how to access it.
Hammerle Finley Can Help With Your Estate Planning Needs
Virginia Hammerle is an attorney with Hammerle Finley Law Firm. She is entering her 40th year in the practice of law. She is Board Certified in Civil Trial Law by the Texas Board of Legal specialization. Contact firstname.lastname@example.org to receive her firm’s newsletter.