The TREEL team recently became involved in a matter that underscores the critical importance of keeping estate planning documents organized and accessible — especially when a trust is named as a beneficiary.
After her husband of 35 years died, a wife began settling his estate. She contacted a financial institution to claim the funds from his retirement account. According to the account records, though, the named beneficiary was a trust — one that was supposedly created over 20 years ago.
The problem? No one can find the trust document.
The couple updated their estate plan about 10 years ago with us. At that time, the husband said he didn’t have any prior estate planning documents. The updated plan didn’t include any reference to this old trust. Yet, the financial institution still had the outdated beneficiary designation on file.
This created a frustrating and expensive bind for the wife and the other beneficiaries.
Why the Trust Document Matters
When a trust is named as a beneficiary, the financial institution needs specific documentation before it can release any funds:
- A copy of the trust agreement
- Proof of who the current trustee is
- Instructions for how the money should be distributed
In this case, none of that exists — at least not that anyone can find. We don’t know if the trust was ever properly revoked, who the trustee is or who the trust beneficiaries were meant to be. And without the trust document, we can’t even open a trust account to receive the funds.
The Next Step: Court
Since there’s no way to verify or enforce the trust’s terms, the only option is to go to court. We are seeking a court order asking the judge to declare that the trust was likely revoked or is otherwise no longer valid and to instruct the financial institution to pay the funds to the beneficiaries named in the husband’s will 10 years ago.
This adds expense and time to the estate administration process, as it requires filing legal documents, serving notice to all potential beneficiaries and waiting for court approval.
Trust Documents Best Practices
This situation is more common than you might think, and it illustrates a few key takeaways:
- Keep your documents safe and organized. A trust isn’t useful if no one can find it when it matters.
- Update beneficiary designations. It’s not enough to revise your will or trust — make sure your financial institutions reflect those updates.
- Tell someone where your documents are. Whether it’s a spouse, adult child or your estate attorney, someone needs to know what exists and where to find it.
- Work with an estate planning attorney regularly. Life changes, and so should your estate plan. A check-in every few years can prevent issues like this.
Estate planning is about protecting your legacy and easing the burden on your loved ones. But even the best-laid plans can fall apart if key documents are lost or outdated. If you’re not sure whether your plan is complete or whether your designations are consistent, it’s worth a quick review now to avoid costly complications later. Call us today to schedule an appointment.
