July 17, 2014
Locating Trust Assets
One of the primary functions that a trustee is entrusted with undertaking is inventorying and appraising the decedent's trust estate, i.e. the assets in the trust. Naturally this can be a difficult situation because the decedent will typically not keep meticulous records of each and every asset they own and its value. Instead a collection of documents will probably comprise the decedent's trust estate. The trustee then must piece together these documents to complete the decedent's financial puzzle. This is not the easiest task to accomplish.
Clients typically ask if there is a short-cut or easier method to search for a decedent's financial assets rather than comb through voluminous amounts of paperwork. Though not a fail-safe answer, an excellent source of financial information is the decedent's income tax return. Either federal or CA is fine because both ask relatively the same questions. Since a person is basically obligated to maintain their tax records for at least a couple of years, it is reasonable to believe that a recent tax return can be uncovered. Granted some people do not do this, but I would like to believe that a person responsible enough to write a trust would also be responsible enough to retain tax returns for a certain period of time.
An income tax return typically yields relevant financial information because people naturally like to invest in income-producing assets. Call me crazy. Rarely, if ever, have I seen, read or heard about a decedent who kept all of their money underneath their mattress. Suffice to say this is not the most prudent way to maintain your assets. Instead I have heard of countless decedents who have invested their money in stocks, mutual funds, business interests, rental properties, certificate of deposits, etc.
For instance, if the decedent has a bank account, they will probably receive a 1099-Int to reflect the interest income they received. The threshold amount for issuing a 1099-Int is quite low, $10. Also, many banks will issue a 1099-Int regardless of the interest income amount. Hence, it is probable that if the decedent had a bank account, they will receive a 1099-Int form from that financial institution the following year. Furthermore, if the decedent owned stock, they might receive form 1099-Div. Additionally, if the decedent had an interest in a partnership, they would receive a K-1 statement. Finally, if the decedent had a rental property, such would be reflected on Schedule E on form 1040.
Fortunately though, real property is usually the most valuable asset in a decedent's trust estate. Moreover, locating real property in California is quite easy, unlike other financial assets. There is no national database for bank accounts for example. Many county recorders offer as-is online searches that can be used to search for a decedent's interest in real property in that particular county. For instance, Santa Clara County has an excellent grantor-grantee website that can be used to discover what property a "Constance Malerick" or a "M.E. Miri" own in Santa Clara County now or in the past.