Bank account not in the Trust & headed for probate: anything we can do now ??

[TrustProblems]

What is the name of your state (only U.S. law)? California

My sister transferred a bank CD that was in the trust to a power of attorney (POA) checking account at the same bank. She was told a POA account can't be in the trust but would transfer to it at death. The account was setup this way with her name on it I believe, so she could write checks for him for things he may need.

My father passed away. The bank now says the POA checking account will not transfer to the trust and must go through probate as it is too large for the pour over will amount to avoid probate.

My sister says another account at another bank was set up the same way and it transferred at death to the living trust.

Questions:

1. Is there anything we can do to avoid probate now ?

2. Is this a bank policy with POA type accounts that they vary how they transfer at death per bank/account policy ?

3. Any other ideas or suggestions ?

Thanks!

 

[Trustholder]

"My sister transferred a bank CD that was in the trust to a power of attorney (POA) checking account at the same bank"

Why did sister do this? What was her intent? What do you mean by POA account? Was the account in father's name with sister as the signatory?

It might be useful to describe this more. A payable on death (POD) account could transfer without probate. I am not sure what a POA account means in this context and why you would think it would transfer without probate. Some states have a "convenience" account where there are joint owners (at least apparently) to allow a POA or other party to write checks for another. In those, when the one who funded the account dies, the account goes to probate. I did not know California did this type of account, but I suppose it can be done through the bank with proper forms delineating what everyone wanted. Combining a convenience account with a POD to yet another party seems like it could be done without that much trouble. I don't think it would be the default for any bank. Those setting it up would have to be very specific as to what is needed.

I think the only way to get this into the trust with the pour over will is though probate as you seem to be saying the amount of the residual estate is too large for small estate or affidavit transfer. Even if the amount was removed from the trust with the intent to be put back and that was neglected for some reason, the petition process to get it there is going to be just as costly and time consuming as going through probate with the pour over will.

 

[TrustProblems]

Why did sister do this?

She was helping him write checks for things he needed. He needed help. They were also thinking she would pay for nursing care if needed from the account.

What do you mean by POA account? Was the account in father's name with sister as the signatory?

Good question. I believe that was the setup. She used the term POA account. Although she did not have a POA over anything else. I think the bank used this term, not sure.

It might be useful to describe this more. A payable on death (POD) account could transfer without probate.

I guess it is not a POD account or they would have told us it is. If there is such a thing, why would not everybody put their money in that as opposed to a non POD account ?

I am not sure what a POA account means in this context and why you would think it would transfer without probate.

This was her term that she thought the bank used. I have never heard that term myself. Again, the bank told her.

My sister went into the bank with an elderly parent, she trusted what the bank tells them, she was not used to dealing with this situation. It would have been best to get something in writing because now the bank says it was all in writing that we should have read. I imagine this situation is not un common. There was a real lack of communication and understanding.

I think the only way to get this into the trust with the pour over will is though probate as you seem to be saying the amount of the residual estate is too large for small estate or affidavit transfer. Even if the amount was removed from the trust with the intent to be put back and that was neglected for some reason, the petition process to get it there is going to be just as costly and time consuming as going through probate with the pour over will.

Is the full account that must go through probate, not just the amount over the pour over limits ?

Thanks for the response!

 

[Trustholder]

"Is the full account that must go through probate, not just the amount over the pour over limits ?"

There are no "pour over limits". A pour over will can handle as much as is not in the trust at death. However, a will needs to be probated. Probate can be easier if the amount and makeup of the assets is low and of a certain type. http://www.courts.ca.gov/10440.htm

 

[TrustProblems]

More Info on the Bank

Hello,

I found out the Bank, Wells Fargo, says we could have kept the trust as the owner of the account adding the POA only. What is amazing is that that no beneficiary was named when Wells Fargo set up the POA account and took the trust off as owner of the account.

The Wells Fargo POA form I see has a place for a beneficiary. The bank won't let us see the paperwork that was signed when this change was made in 2012.

Again, if they would have kept the trust the owner or named a beneficiary when they changed the account to a non trust owned account all this would have been avoided.

We have gone in to the bank and we can't get past the assistant manager level to see if they can do anything.

I wonder if there is anything else that can be done still or an attorney could help ?

Looks like probate will be around 7% cost and 8 to 12 months from my internet research.

 

[Dandy Don]

There is no such thing as a POA account in the banking/financial world.
What was meant was probably a POD account.

What your sister filled out was a POA Form issued by Wells Fargo to verify that she represents herself as his POA and is authorized to do so. Did your sister receive a signed power of attorney form, previously before signing the Wells Fargo document, that was granted by her father? If she did not previously receive a POA from her father, then getting a POA from the bank is the same thing.

Is your sister also the trustee of the trust? Evidently she is, because that is the only way she could have been legally authorized to transfer a trust account asset out of it.

The fact that the bank is turning this account over to probate is a very strong indication that there was no joint account owner and no beneficiary designated at the time the account was opened, and those are 2 simple mistakes that your sister and dad probably made without truly understanding what was needed.

You can consult with a probate attorney or one who specializes in probates and trusts just to see if you have any options and to have your other questions about the probate process answered, but there is not much that the attorney can do now that would keep this account out of probate.

If your sister's name was on the account, as you indicated, then something is very odd about the fact that the account has not been given to her upon the death. Let's hope that the bank does not suspect her of fraud or elder abuse, and you will just have to wait and see what information may be or may not be on the form.

 

[TrustProblems]

There is no such thing as a POA account in the banking/financial world.
What was meant was probably a POD account.

She was a POA on the account, so I shouldn't say POA account.

Did your sister receive a signed power of attorney form, previously before signing the Wells Fargo document, that was granted by her father?

Yes. Wells Fargo wanted their own POA form filled out.

Is your sister also the trustee of the trust? Evidently she is, because that is the only way she could have been legally authorized to transfer a trust account asset out of it.

I think she would have been considered a successor trustee at the time. With my dad as the trustee.

The fact that the bank is turning this account over to probate is a very strong indication that there was no joint account owner and no beneficiary designated at the time the account was opened, and those are 2 simple mistakes that your sister and dad probably made without truly understanding what was needed.

Yes. Sister says they told her everything would still be in the trust when the account was switched from a CD to checking account. She should have made sure in writing. Even though she was POA, the statements went to my dad which would show the account was no longer titled as the trust being the owner.

If your sister's name was on the account, as you indicated, then something is very odd about the fact that the account has not been given to her upon the death. Let's hope that the bank does not suspect her of fraud or elder abuse, and you will just have to wait and see what information may be or may not be on the form.

She was just listed as the POA. So I guess not a joint account I assume. POA ends at death. I think the bank was totally incompetent to not make sure people understand what they are doing. I can't believe no beneficiary was required by the bank.

Sounds like it will be tied up in probate court, we will pay fees, possibly she will be charged with fraud or elder abuse all while the banks have no responsibilty.

They even told me I should consult with an attorney before opening an account. What a sad state of affairs. I would never bank with Wells Fargo again. Much better experience with other banks, everything went smoothly.

 

[anteater]

... possibly she will be charged with fraud or elder abuse all while the banks have no responsibilty.

Why would that be?

 

[Dandy Don]

Elder abuse is not really a possibility--I was just speculating. You can't necessarily blame the bank here--your father could have decided that he did not want to designate any beneficiaries for this account. Just wait and see what the paperwork reveals before you come to a conclusion about what may have happened here.

 

[FlyingRon]

Again, your terminology is confusing, but a POA has ZERO authority after the grantor dies. If all you mean is she had a POA on file with the bank for an account in the now deceased persons name, she is NOT allowed to do anything with that money. PERIOD. END OF STORY. That money belongs to the estate and must be probated.

 

[TrustProblems]

Sorry about terminolgy again-Bank used same term though

Again, your terminology is confusing, but a POA has ZERO authority after the grantor dies. If all you mean is she had a POA on file with the bank for an account in the now deceased persons name, she is NOT allowed to do anything with that money. PERIOD. END OF STORY. That money belongs to the estate and must be probated.

I agree again about my terminology. This is what Wells Fargo called it, so they are also confused. Still looking for ways around probate. Family definitely should have caught this and as the bank told us we should always have an attorney look over things before we open an account.

My family was not educated in these things. I realize they should have known better and maybe there is more to the story I don't know.

 

[FlyingRon]

There's no way "around" probate. There is likely the small estate affidavit that gives you a simplified path through probate.

The bank attorney is likely going to tell you what we have told you. The POA authority ended when the account owner died. The account is now part of the estate and they can not release funds without letters testament from the probate process.
You'll need to talk to a probate attorney.

 

[TrustProblems]

There is likely the small estate affidavit that gives you a simplified path through probate.

It was mentioned already the account was over that amount.

The POA authority ended when the account owner died.

I believe this has been mentioned already ?

 

[FlyingRon]

I believe this has been mentioned already ?

And I'm the one who mentioned it, but the OP seems to keep thinking that it means something despite being told otherwise.

 

[TrustProblems]

And I'm the one who mentioned it, but the OP seems to keep thinking that it means something despite being told otherwise.

I don't see that, where are you getting that from ?

The OP, myself already mentioned it was above the small estate affidavit amount, did you miss that ?