Many people come into our office holding their parents’ family home in their parents’ trust years after both parents have passed away. What most of these people don’t realize is that once a trust serves its purpose, the trust should typically be defunded and the assets should be moved to a new trust. This is done to avoid probate, which can be a lengthy and costly process. By defunding the trust and moving the assets to a new trust, you can ensure that the assets are distributed according to your wishes and in a timely manner.

For example, let’s pretend Mom and Dad passed away in 2019 and the trust left their house to two adult children, Son and Daughter. If Son and Daughter want to keep the family home, they should typically not leave the house in the parents’ trust since the purpose of this trust was to leave the house to Son and Daughter outside of probate. Now that Son and Daughter have inherited, the purpose of the trust has been satisfied. As a result, if Son was to pass away, his 50% interest in the house would likely need to pass through probate court. Alternatively, what Son and Daughter should do his move his or her 50% interest into his or own trust, which would allow that same interest to avoid probate court and allows Son or Daughter to designate his or her own beneficiaries.

In summary, when both parents pass on, you should speak with a trust attorney about next steps, which is typically a combination of trust administration for your parents’ trust and estate planning document drafting for you.

For more information, please contact info@tyrelawgroup.com or 626-858-9378.