Occasionally, a loved one dies and assets are titled in the name of a trust. Or perhaps there’s a life insurance policy life that names a trust as a beneficiary. But … no one can find the trust agreement. What do you do in the case of a missing trust?
Life insurance policy payable to missing trust
In the case of a life insurance policy payable to a missing trust, here’s what you do. First, check to see what the insurance carrier will require. Perhaps there’s language in the policy itself that covers this situation. Policies usually have provisions dealing with the proceeds when a person named as a beneficiary predeceases the insured and there is no contingent beneficiary named. The insurance company will normally only pay out to the trustee. The one thing the carrier won’t normally do is simply pay the funds into the deceased person’s estate.
The case is the same for a house owned by the trust.
If there is a house owned by the trust, you still need to determine the trustee and beneficiaries. In that case, you probably need a court order. Keep reading …
The solution in most cases.
The solution for most situations (including the life insurance example) is to go to court. You petition the court to determine the trustees and beneficiaries. In the process, you need to show :
- What steps were taken to look for the trust (searching the house, checking the recorder’s website, contacting the decedent’s attorney if known, and so on).
- Whether a will exists that names devisees (person’s to receive the remainder of the estate). After all, a trust would typically benefit the same people as the insurance policy.
- Who the intestate heirs would be if there’s no will, etc.
The goal of petitioning the court is to appoint a trustee of the Trust and approve a proposed distribution of the Trust. Once appointed, the Trustee will then make the claim on insurance and collect the insurance proceeds.
Here are some details about the court process.
Since there is no Trust instrument, your attorney will submit the proposed distribution with the prior consent of all likely beneficiaries. Likely beneficiaries are usually the surviving family members, spouse, kids, etc. Notice of the hearing to the unknown beneficiaries would be given by publication. If no one shows up at the hearing to object, the court would likely approve of the proposed distribution among the likely beneficiaries. If you cannot obtain the family’s consent to a proposed distribution, then the process would be the same. But you likely would be facing objections. In the end, if the policy does not control the outcome, then the court is going to step in and do so.
We can help.
My name is Paul Deloughery, and I’m an attorney at Magellan Law, PLC. My practice focuses on estate planning and probate litigation. I can be reached at 602-443-4888 or firstname.lastname@example.org.
The author is not engaged in rendering legal, accounting, or other professional service. Although prepared by professionals, you should not use these materials as a substitute for professional service in specific situations. If you need legal advice or other expert assistance, seek the service of a professional.