Lost or Missing Trust Documents in California: What Are Your Options?

What Happens if Your Trust Documents Are Missing in California?

Living trusts are often created with the expectation that they will remain in place for many years. Unfortunately, trust documents can be misplaced, destroyed, lost during a move, or simply become impossible to locate.

Sometimes a person may still have a Certification of Trust, a recorded deed showing property in the trust, an amendment, or other evidence that the trust exists, but the complete trust agreement itself cannot be found.

What happens next depends largely on whether the person who created the trust is still alive.

If the Trustor Is Still Alive

If the person who created the trust, commonly called the settlor or trustor, is still alive, competent, and retains the right to amend or revoke the trust, the problem may be relatively straightforward to correct.

In many cases, the trustor may be able to execute a complete restatement of the trust. A restatement replaces the substantive provisions of the prior trust while generally preserving the identity and original date of the trust.

Evidence that the prior trust existed may include:

• A Certification of Trust;
• Recorded deeds identifying the trust;
• Bank or investment accounts titled in the trust;
• Copies of trust amendments;
• Prior estate planning correspondence;
• Trust schedules; or
• Copies or drafts maintained by the attorney who prepared the original estate plan.

Depending on the circumstances, another option may be to revoke the existing revocable trust and prepare an entirely new trust.

However, care should be taken before simply preparing a restatement. If the original document is unavailable, it may also be unclear what procedures the trust required for amendment or revocation, whether there were multiple trustors, or whether part of the trust has already become irrevocable.

What if One Spouse Has Already Died?

The situation can become significantly more complicated if a married couple created a joint trust and one spouse has already died.

Many joint living trusts become partially or completely irrevocable upon the death of the first spouse. For example, the trust may divide into a Survivor's Trust, Family Trust, Decedent's Trust, Marital Trust, or similar subtrusts.

The surviving spouse may continue to have authority to amend his or her own portion of the trust, but may have limited or no authority to change the deceased spouse's portion.

For that reason, a surviving spouse should generally not execute a blanket restatement of a missing joint trust without first determining what portions of the trust remain revocable.

What if the Trustor Has Already Died?

Once the trustor has died, the successor trustee generally cannot simply create a replacement trust based on what the family believes the original trust said.

Instead, it may be necessary to ask the probate court to determine the existence and terms of the trust.

California Probate Code section 17200 permits a trustee or beneficiary to petition the court concerning the internal affairs of a trust. Among other things, the court may determine whether a trust exists, interpret its terms, determine beneficiaries, determine the rights of interested persons, and give instructions concerning administration.

A petition may ask the court to determine matters such as:

• That the deceased person created a trust;
• The name and date of the trust;
• The identity of the trustors and trustees;
• The operative terms of the trust;
• The beneficiaries;
• The distribution provisions;
• The successor trustee; and
• Which amendments, if any, remain effective.

Can a Court Reconstruct a Lost Trust?

Potentially, yes.

The fact that the signed original cannot be located does not automatically mean that the trust cannot be established.

California law permits the contents of a lost writing to be proven through appropriate secondary evidence in certain circumstances.

Evidence may include:

• Photocopies or electronic copies of the trust;
• Unsigned attorney drafts;
• Amendments quoting or referring to the original trust;
• Certifications of Trust;
• Recorded deeds;
• Trust schedules;
• Bank or brokerage records;
• The drafting attorney's file;
• Estate planning questionnaires;
• Correspondence discussing the estate plan; and
• Testimony from attorneys, trustees, beneficiaries, witnesses, accountants, or others familiar with the trust.

The more consistent evidence that exists concerning the trust and its terms, the stronger the basis may be for asking the court to recognize or reconstruct the trust.

A Missing Trust May Also Create a Property Ownership Problem

Determining what the trust says and determining what property belongs to the trust are related but separate issues.

For example, a family may be able to establish that a trust existed, but a residence may still be titled in the deceased person's individual name.

Depending on the circumstances, a petition under Probate Code section 850 may also be necessary to determine that a particular asset belongs to the trust.

Missing or disputed trust terms: A Probate Code section 17200 petition may be appropriate.

Missing or disputed ownership of an asset: Probate Code section 850 relief may also be appropriate.

In some cases, both issues can be addressed in the same court proceeding.

Sometimes Terminating the Trust May Be More Practical

Reconstructing a missing trust is not always the only available solution.

Depending on the circumstances, it may be more advantageous to ask the probate court to modify or terminate the trust and determine how the remaining property should be distributed.

California law permits courts to modify or terminate irrevocable trusts in certain circumstances. For example, Probate Code section 15403 permits beneficiaries, under specified circumstances, to petition for modification or termination of an irrevocable trust. Other statutory grounds may also apply depending on the facts.

This can sometimes be a more practical solution where the trust documents are substantially missing, administration has become difficult, or attempting to reconstruct every provision of the trust would create unnecessary expense.

However, termination should not be treated as an automatic solution simply because the documents are missing.

Carefully Review What Happens to the Property Before Terminating the Trust

Before asking a court to terminate a trust, it is critical to determine where the property will go after termination.

The original trust may have contained a distribution plan that is very different from the result under a Will, a probate proceeding, or California's intestacy laws.

Before seeking termination, the following should generally be reviewed:

• Whether the deceased person left a Will or pour-over Will;
• Who would inherit under that Will;
• Who the deceased person's intestate heirs would be;
• Whether any surviving trust documents identify beneficiaries;
• Whether amendments reveal the intended distribution;
• Whether the assets are actually owned by the trust;
• Whether some assets instead belong to the probate estate; and
• Whether termination could cause property to pass to different people than the trustor intended.

For example, if the original trust intentionally excluded an heir but the trust is terminated without first addressing the intended distribution, the resulting probate or intestate distribution could produce a very different result.

For that reason, the potential probate and intestacy consequences should be analyzed before deciding that termination is preferable to reconstructing the trust.

A Missing Trust Is Not Necessarily a Lost Cause

A missing or incomplete trust does not automatically mean that the estate must proceed through probate or that the trust can no longer be administered.

If the trustor is alive, the trust may potentially be restated, revoked, or replaced.

If the trustor has died, the probate court may be able to establish the existence and terms of the trust through copies, records, testimony, and other secondary evidence.

In appropriate circumstances, modification or termination of the trust may provide another solution.

The appropriate strategy depends on what documents remain, whether the trust is revocable or irrevocable, whether one or more trustors have died, how the assets are titled, who the intended beneficiaries appear to be, and what distribution would result under the available alternatives.

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Have Questions About a Missing or Incomplete Trust?

Forward Estate Planning assists clients with California trust administration, probate, trust petitions, and estate planning matters.

If an original trust cannot be located, it may be worthwhile to review the remaining documents and records before assuming that the trust has failed or that a full probate proceeding is required.

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This article is provided for general informational purposes only and does not constitute legal advice. Every trust and estate matter depends on its particular facts. You should consult with a qualified California attorney regarding your specific circumstances.