HOW TO ACCESS CASH ON DEATH
(CASH AVAILABILITY PLANNING)
By: David L. Crockett, Attorney, CPA
UCLA Law School , J.D. ’69, UC Berkeley ’66
901 Dove St., Ste 120, Newport Beach, CA 92660
Phone: 949-851-1771
Email: David@CLCNewport.com
Website: TrustandProbateLawyers.com
Typical problem.
We all need spendable money to survive from day to day. If you become disabled or pass away, the need for immediate spendable money still goes on. For example, somebody may need to buy you groceries, make payments, pay for medicines and caregivers and pay for funeral expenses, etc. If all of your money and accounts are in your trust OR in your name alone as the only signer on those accounts, who will be able to make payments for you?
Delays if you have a living trust.
In a typical living trust, you, as the person forming the trust (the Trustor) will be the signer on the trust bank and securities accounts. Your trust will have provisions which will allow for the appointment of a successor trustee upon your death or if you are declared mentally incompetent. However, there is a practical problem which causes time delays in being able to access the trust bank and securities accounts. Your successor trustee will need a death certificate which is issued by the county to show to the banks to prove your death and their succession to the job of being the trustee and signer on the accounts. As a practical matter, a death certificate generally takes one to three weeks to obtain in normal circumstances and sometimes much longer. So, without a death certificate, the money in your trust is locked up and inaccessible for at least several weeks.
Delays if you have no trust and a probate court proceeding.
If you don’t have a living trust then your estate may have to go through the probate court system. The first step in probate is to get the court to appoint an executor (if you have a will) or an administrator (if there is no will). The banks and securities companies will not allow access to any of your accounts until there is a court appointed executor or adminis-trator. Even if you have a death certificate, it will take six to twelve weeks for the executor or administrator to be appointed. Meanwhile, your money is locked up and inaccessible for a month or two.
Simple solutions.
In earlier times, this was not a problem because people kept rolls of cash or gold coins in their house that their successors/relatives/surviving spouse could access and use. Here is what works best in the interim period in today’s world.
A. Open up a joint signature bank account allowing any one person who is a signer to withdraw money. If you have adult children or close friends or relatives, have them as signers and give them some checks or a debit card to use just in case. This works if there is a trust or a probate. Fund the account with enough money to pay a month’s worth of normal expenses. I would suggest $3,000 to $10,000 in a typical situation.
B. If you do have a living trust, I would still recommend using the joint account procedure but with a trust you can do something else as well. You can appoint a co-trustee who is given authority to sign on the trust bank accounts. Your trust would have to contain provisions to allow the appointment of a co-trustee and legal procedures as specified in the trust would have to be followed to appoint a co-trustee while you are alive. This would have to be done while you are alive, well and mentally competent. The downside to having a co-trustee while you are alive is that the co-trustee would typically have unlimited access to all trust accounts and money.
C. A Durable Power of Attorney might be used for access to the money in your trust when you are alive but disabled but there are complications. Not all banks or securities companies will recognize a power of attorney and/or they will want you to use their form to allow the power of attorney in fact to access the trust money. Also, the trust must have the proper language required by law for the power of attorney to have access to trust money. Finally, the power of attorney is invalid if you are deceased, so it is useless for post-death cash needs.