Does The Attorney Always Understand Your Living Trust?

Real Example Case — The Cookie Cutter Trust 

I’m going to go through an actual case study that walked in my door, in which you should ask, “Does the attorney always know what’s going on?”.

So, here is the story.

In Aunt May’s estate, there was a provision that says, “My estate is going to be divided between the following five people.”

Tom was to receive 30%, Gertrude 10%, William 10%, Paul 10%, and Jerome 30%. Seems easy. Seems straightforward. Why would I need a well-drafted trust for this? 

In this case, however, Tom passed away before Aunt May. So, we now had to figure out who gets Tom’s share? 

Everyone is probably asking — well what did the document say?

Usually, the Trust says, “If Tom passes away, then I want my stuff to go to X, or to his children”. This clause did not exist. 

When a clause does not exist, we need to turn to the California Probate Law to see who gets Tom’s share. 

We even asked a few attorneys what they thought, and each had a different answer! One attorney stated that it was supposed to go to his children. Fine, we thought. It sounds like a great answer. 

The other one said it should go to his estate. Which means that it should be distributed to his heirs by the California Probate Law. 

The third person said it goes evenly between Gertrude, William, Paul, and Jerome. What? How can there be such ambiguity. 

So, what is the answer to this? 

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Well, the answer is, it depends. That’s what the lawyers should have told us. It depends on the relationship between Tom, Gertrude, William, Paul, and Jerome. 

Are those people Tom’s children? Are they related? How are they related? If they are related, then it would go to them in an intestacy style way. But if they are not his children, then it would go to his children.

So, where does the answer that his heirs should get it to come into play? 

Well, if Tom would have passed away after Aunt May– say, about 10 days after Aunt May– then it would have gone on to his estate.

This is a common problem we see with cookie-cutter trusts. Specifically, where they don’t tell us where the assets are going. 

But, wait? Is this fair? Is this what Aunt May would have wanted? 

Does it matter? 

What’s so sad about it is that what the person actually wanted isn’t in writing, and we cannot figure out or even know what they wanted. Too bad it has to go by the law.

So, did they want this to happen? Was this the intention? 

We don’t know, but luckily, we know the outcome of what happened.

Are you unsure about the state of your estate planning documents? Schedule a strategy session today!