The following case study highlights the benefits of using a Revocable Living Trust where the chosen beneficiaries are other than the natural objects of one’s bounty.   This case showed why a living trust may be better when someone wants to cut out a child or other close relative from one’s estate.

The client had no estate planning documents in place when he came in to meet for the first time.  As we normally do, we reviewed his family make-up.  I learned that he had no spouse or children nor did he have any brothers or sisters.  His closest relatives in fact were numerous cousins.  Most of the cousins lived in Puerto Rico but one lived in Florida.  After a detailed discussion of his wishes, he decided that he wanted to give a portion of his estate to his close friend with the remainder to the second cousin in Florida.  The documents were drafted to affect his wishes and were completed for signature.  He came in to the office and signed the trust and other documents.  We immediately transferred his real property into the Trust.  Two days after signing the trust he unexpectedly passed away.  Unfortunately, he had not completed the process of transferring his remaining assets into the trust when he died.

This is where the real advantages of the trust became evident.  Because the real estate was in the Living Trust, we were able to transfer ownership to the named beneficiaries under the Trust over the course of the next week or so.  One of the properties was first sold and then the proceeds were distributed to the beneficiaries so the proceeds could not be disbursed until the closing, but they were promptly disbursed at that time.

The assets that were not transferred into the living trust, on the other hand, had to go through the probate process, which lasted approximately one year.   The probate process was longer than normal primarily because the numerous relatives in Puerto Rico had to be contacted, they had to be served with a copy of the Will, and their consent to the probate had to be obtained.  Even though the client did not want his other cousins to receive any of his estate, the law required that they be given notice of the probate proceeding and an opportunity to object.  This search can be even more onerous and time consuming in cases where the relatives cannot be found, where it is unknown whether they exist or if they are alive or dead.  Moreover, the estate had to remain open for the perfunctory period of 7 months to allow creditors to come forward.

Suffice it to say, all of this led to additional time and cost that would not have been required if the full living trust plan was allowed to work for the client.  The additional work was exacerbated by the fact that the closest relatives were not close to the decedent both personally and geographically.