Question: I am dating a married man. He is well off and has told me several times he will leave his estate to me and my kids when he dies. His kids are grown and out of the house and the only reason he is not getting a divorce right now is for tax reasons. He has said he will create a trust for me but hasn’t done that yet. He owns a lot of real estate but does not have much other money, or he would give it to me now. He is quite a bit older than me and, if he does not actually do the trust, I am wondering what I will need to do to claim my inheritance?
Answer: Ah, where to begin? An “oral” trust or a promise to create a trust in the future, as opposed to an actual written trust agreement, is enforceable only if the requirements for an enforceable contract are satisfied. A contract is, generally when there is an offer by one party, say your boyfriend, and an acceptance of the offer by another, let’s say you. An essential rule for an enforceable contract is consideration. I guess in your situation, you may think that having an affair with him is the consideration you are “giving” him for some future payout? There are also other elements of contract law to be satisfied: Is the “agreement” unreasonable or inequitable? Is it against public policy? Is there extrinsic evidence that such an oral trust or contract was ever made? In other words, claiming his estate because he told you he wanted you to have it, is almost definitely not enough for you to claim his estate.
Further, in California, assets that a married couple buy during their marriage are almost always community property. This means his spouse and his children, not you or your children, have a right to his assets. You, my dear, do not have a right – despite his promises. Finally, as to real estate, an oral agreement to give it to someone is not enforceable.
Next, he claims he is not getting a divorce for tax reasons? I’m sorry, cheating spouses have for time immemorial given dubious reasons for having affairs and not divorcing: “I have to wait until the kids are older,” “My spouse is sick, I can’t leave her right now.” I have never heard the tax one and I cannot imagine what that actually means.
Question: We have done as you recommend and got an estate plan including a trust agreement. Do we need to record the trust? If so, where and how is that done?
Answer: Generally speaking, a trust is not recorded immediately on execution, if at all. One of the reasons we like trusts is because they remain private. Unlike wills that are probated in court and the terms made public, when your estate is distributed under a trust, the terms generally remain confidential. Sometimes a trust will get recorded when real estate is involved, but usually that is not required.
Liza Horvath has more than 30 years of experience in the estate planning and trust fields and is a licensed professional fiduciary. Liza currently serves as president of Monterey Trust Management. This is not intended to be legal or tax advice. If you have a question, call (831) 646-5262 or email email@example.com.
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