A friend recently lost his wife and it has been difficult for him to adjust. He and his wife did a joint trust about ten years ago but he had not looked at it in years. Now he is refinancing his house and the bank is not letting him, stating that there should have been things done regarding the trust after his wife died. Any thoughts?
– Flummoxed on Franklin
Dear Flummoxed on Franklin:
I have heard this situation many times before. Unfortunately, after a trust is signed, many folks put it in a drawer and forget about it for years. People sometimes forget that trusts are legal contracts with legal obligations. In addition, many people don’t understand what their trust requires and just think that things will automatically “take care of themselves” after they pass away.
One of the most important “times” in the life of a trust is at the death of the first spouse. Sometimes there are legal obligations required of the surviving spouse. If these obligations are not followed, the surviving spouse might have trouble getting things done with financial institutions (like, for example, refinancing a house).
A trust must be reviewed every few years. The laws and your situation can change. It is also critical that you meet with an attorney shortly after at the death of the first spouse. There are planning opportunities and requirements that often must be handled immediately.