Collecting Assets as a Trustee – When Bank Account and Investment Account is in Decedents Name

It’s not always easy to be a trustee, and there are many complicated steps you may need to take. What if the bank account or investment is in the decedent’s name? What if it’s not in the trust, there’s no joint owner, and there’s no POD beneficiary? How do you handle that? In this article, we will go over all the necessary actions for handling these situations.

 

First, banks are not always very up to speed on trust, administration, probate, and rules. Don’t be surprised if you go to the bank and tell them you are the successor trustee of the decedent’s account and you like to take possession of the funds. The bank will say no.

 

And the reason why is because the bank needs what is called a letter of testamentary. Letters of testamentary is a fancy word for what an executor gets once they petition for probate and they are approved, and the court appoints them as an administrator or an executor of an estate. Is it needed in this case? That depends on how big the account is. How many assets are sitting there in the decedent’s name?

 

In California, if you have assets that exceed $166,250 in your name after you pass away, then California law says that a judge should supervise the administration of those assets. That supervision process is called probate. When you have that are less than $166,250, you can potentially do a shortcut. If the amount is less, letters of testamentary and full probate are not required.

 

As the trustee of the trust, you can have prepared what is called a small estate affidavit. California law will allow you to prepare a special legal document that says that you are the rightful successor and interest in these funds that belong to the decedent. Once you prepare the small estate affidavit, you walk into the bank, give them the original, and it’s notarized and has your legal information on it. Once you hand them the small estate affidavit and if the bank is cooperative and smart, that should allow you to receive possession of those funds without going through probate or doing anything more involved.

 

If the assets exceed $166,250 and it does occur sometimes, this will require a full probate. That means you will have to petition the court to get you appointed, get letters of testamentary, inventory and appraisal, petition for distribution once it’s all done, with creditor claims paid. Once those assets come out of the probate, they will be distributed to you as trustee of the trust, and then you can handle them from there. All of this can take a long time, at minimum six to nine months, and it’s a pain.

 

We hope this gives you some idea as you look at a bank statement or an after-tax investment account statement and see how it’s titled on the trust and that this has information has been helpful for you.

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