Series EE bonds & a Living Trust

[Shadowbunny]

What is the name of your state? AZ

Hi All;

Trying to help my Mom out with a savings bond question. First, the disclaimer. Although I know it's preferable to have the involved party post their own questions, she is not technologically adept.

Background:

My parents purchased some Series EE bonds in 1990 that have matured.

In 1991, they created a Living Trust, and transferred their assets (including the savings bonds) into the Trust.

Bonds are titled(?) as follows: *Leonard Hoftstedter & Penny Hoftstedter TR U/D/T DTD 5-10-91

Dad passed in 2005.

2017 Mom updates Living Trust. Bonds are not reissued under new Trust's name.

Mom goes to bank today to cash in bonds, is told she can't because Dad is the primary and his SSN is on the Bonds.

If I understand the info I found here ( https://www.treasurydirect.gov/indiv/help/TDHelp/help_ug_292-EntityAccountsLearnMore.htm ), she should be able to register the bonds as a trustee of an entity account.

Trust (Trustee of a Trust). A trust form of registration is available.

• The entity account manager must certify that he or she has the authority to act alone on behalf of the trust with regard to the account.
• The wording in the registration must specifically identify the trust. The registration must state:
  1. The authority or document creating the trust.
  2. The date the document was executed. (Not necessary in the case of a probated will.)
  3. The name of a trustee who is authorized to act alone on behalf of the trust.
  4. Any information that is necessary to distinguish the trust from any other trust.
  5. Name of the Grantor

So my question is this:

Since the Original Trust (OT) longer exists, and the bonds are still in the name of the original trust, is establishing a Treasury Direct Entity Account the proper step? If so, who the heck is the Grantor in this situation?

Or, since Mom was the benefactor of the OT, does she proceed under the "bond with no survivor listed" process outlined here?: https://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eedeath.htm#who

Any insight/help would be much appreciated.











*not their real names

 

[FlyingRon]

The bonds belong to the trust that's shown on them. She will have to show that she is now the trustee of that the trust they are currently listed under. If she's not the trustee to the trust they're titled under, she's going to have to get that fixed.

 

[Taxing Matters]

2017 Mom updates Living Trust. Bonds are not reissued under new Trust's name.

Updates the trust? Or revokes the old trust and establishes a new one? There is a significant difference between the two.

 

[Shadowbunny]

Updates the trust? Or revokes the old trust and establishes a new one? There is a significant difference between the two.

Good question, TM. Old was revoked. Apparently there had been significant changes in the laws governing trusts in AZ by the time the second trust was established.

 

[Taxing Matters]

Good question, TM. Old was revoked. Apparently there had been significant changes in the laws governing trusts in AZ by the time the second trust was established.

Then here is the problem: the old trust that owned the bonds was revoked. That means that the old trust no longer exists and the assets of the trust reverted back to the grantors of the trust. That would likely mean that Penny would be the owner of the bond since her husband had already predeceased her. She would then have to contribute the bond to the new trust to have it a part of that new trust. But she now wants to simply cash the bonds. So at this point I think what she needs to do is simply have the bonds reissued in her name as his survivor and then cash them. There is no point now to having them retitled to the new trust.

The bonds belong to the trust that's shown on them. She will have to show that she is now the trustee of that the trust they are currently listed under. If she's not the trustee to the trust they're titled under, she's going to have to get that fixed.

The old trust was revoked and no longer exists. There is therefore no longer any trustee of that trust and it wouldn't matter anyway because the assets reverted to the grantors upon the revocation of the trust. And as it appears the bonds were never contributed to the new trust, being the trustee of the new one wouldn't help.

 

[FlyingRon]

She claims the trust no longer exists, but that perhaps is not the case. Maybe everything else was transferred to a new trust.

 

[Shadowbunny]

The old trust was revoked and no longer exists. There is therefore no longer any trustee of that trust and it wouldn't matter anyway because the assets reverted to the grantors upon the revocation of the trust. And as it appears the bonds were never contributed to the new trust, being the trustee of the new one wouldn't help.

That makes sense, and will probably be a lot easier than getting them re-issued under the new trust's name.

She claims the trust no longer exists, but that perhaps is not the case. Maybe everything else was transferred to a new trust.

I actually went to all of the estate attorney appointments with Mom, so was privy to what assets were used to fund the new trust. Mom never mentioned that she had any bonds at that time, so they weren't a part of the new trust.



Thank you both for your input. Mom is still very sharp at 87, but still relies on me for these matters.

 

[FlyingRon]

The question is whether the previous trust was formally terminated or still exists with this asset. If the trust still exists, and mom is presumably the trustee, she can authorize cashing/retitling the bonds. She'll likely need to bring the trust document (believe me, I've had to give copies of the stupid thing to all sorts of closing folk when transferring real estate. I scanned the thing into a PDF file to make it easier).

 

[Shadowbunny]

The question is whether the previous trust was formally terminated or still exists with this asset. If the trust still exists, and mom is presumably the trustee, she can authorize cashing/retitling the bonds. She'll likely need to bring the trust document (believe me, I've had to give copies of the stupid thing to all sorts of closing folk when transferring real estate. I scanned the thing into a PDF file to make it easier).

Part of the issue (at least at the moment) is that Mom showed up to the bank with the bonds, Dad's death certificate, and her ID, but no trust docs. Since the bonds are in name of the trust, the bank (correctly, I believe) didn't cash them. Mom swears that they told her they couldn't cash them because Dad's name was on the bonds, but I'm pretty sure they told her it was because they are in the Trust's name and she didn't bring the Old Trust with her. I think I'm just going to have to bite the bullet and go to the bank with her, Trust docs in hand....

 

[TrustUser]

i thought the op stated that the first trust had been revoked ? if so, it is no longer a legal entity. not to say that the bank would ever find out about it. but you ought to find out what is the correct way to handle the problem.

 

[FlyingRon]

Even if the trust had been revoked (and despite Shadowbunny saying it was, I suspect it wasn't), you'd still need the copy of that trust plus proof it was revoked to show that the asset needs to revert to the granter.

The bank isn't being "insolent" because they desire proof that the person who is asserting that the asset belongs to them actually has some legal basis for making such claim.

 

[TrustUser]

hi ron,

was the comment about the bank not being insolent aimed at me ??

 

[Taxing Matters]

Even if the trust had been revoked (and despite Shadowbunny saying it was, I suspect it wasn't), you'd still need the copy of that trust plus proof it was revoked to show that the asset needs to revert to the granter.

And what is the reason for suspecting it wasn't revoked? Revoking a revocable trust is easy to do, and generally a necessary step if you want to get those assets out of the trust and do something else with them. If her mother went to an attorney to have the new trust done then the attorney almost certainly advised her (and likely assisted her) in revoking the old trust. In any event, Shadowbunny is in a much better position to know what happened than you, I, or anyone else are.

 

[FlyingRon]

It's not clear that it's a revocable trust. If it was dad's revocable trust, it became irrevocable at the time he died.

But either way, the bank is not "insolent' just because they won't take the word of someone who claims to be the owner of an asset titled to a trust without showing any documentation that they are the trustee or otherwise the rightful owner.

 

[Taxing Matters]

It's not clear that it's a revocable trust. If it was dad's revocable trust, it became irrevocable at the time he died.

Certainly we haven't been able to read the trust. We have to rely on what we are told by the person who has the facts. I don't get where your skepticism is coming from. By the way, it is not at all uncommon for married couples to do a joint revocable living trust, with the trust therefore not becoming irrevocable until the second spouse dies. I'd not be at all surprised to find that was the case here.

But either way, the bank is not "insolent' just because they won't take the word of someone who claims to be the owner of an asset titled to a trust without showing any documentation that they are the trustee or otherwise the rightful owner.

That's the second time you've made reference to the bank not being "insolent", with the word in quotes. Why? No one else in this thread used the term or said anything suggesting that the bank was being insolent — being rude or showing disrespect — about this. So where is that coming from?