Administration of Missing Person's Estate
It is a traumatic experience to have someone close to you go missing. Not only is the mental trauma of not being to locate the person strenuous, but the financial aspect also begins to take its toll. The requirement to fulfill the needs of the absentee’s family and creditors and also to manage and protect the property has led to the enactment of legislature in many states including California.
For the immediate needs of maintenance and protection of property, a trustee can be appointed for a person missing for at least 90 days who is a resident of the state. This is only applicable in cases where the missing person is still presumed to be alive.
But, what is the recourse when a person has been missing for a very long period of time? In California, a petition can be filed to declare a person “presumed dead” when that person has been missing continuously for five years or more. The absentee’s surviving spouse, registered domestic partner, some family members, or creditors can file this petition in the missing person’s last known county of residence. The “presumed dead” petition is governed by California Probate Code Sections 12400-12408.
Under Section 12404, the petition must include the person’s last known place of residence and the address, the time and the circumstances when the person was last seen or heard from along with the description of the search and enquiry that had followed. The Court shall determine at the hearing whether the person can be presumed dead or whether the court wants further investigation about the whereabouts of the missing person, as per section 12406. If the Court finds the missing person presumed dead as per section 12401, then under Section 12407, the Court will also determine the date of death and appoint a personal representative to administer the estate in the same manner as that of a deceased person’s estate.
The missing person if he reappears later has the option of recovering his property from the beneficiaries under Section 12408. He will have to do so within a period of five years since the distribution of the assets. His right of recovery will be affected by what seems fair under the circumstances and will also take into account the cost of legal fees and other costs of administering the estate.
Which is Better: a Will or a Trust?
One of the most frequent questions I receive from clients goes to the very heart of estate planning—the difference between a will and a trust. When creating a trust, most individuals also create a will (usually a pour-over will), which further confuses the issue. When a client seeks guidance from me on whether it is better to create a will or a trust, the short answer usually is: it depends.
A will (sometimes called a last will and testament) is a foundational estate planning document and one that should be considered by every individual. The primary purpose of a will is to provide a set of instructions for the probate court to follow after your death. Basic issues that are addressed in a will are your choice of executors (the person who will be in charge of your estate) and your desired distribution of your property at your death. While a will is essential to any estate plan, by itself a will has two key drawbacks: it does not avoid probate; and it does not address the issue of your incompetency.
By contrast, a trust (sometimes called a living trust) is usually designed to accomplish everything addressed in a will (naming fiduciaries and designating where your assets go upon your death) but also usually provides the added benefits of avoiding probate and allowing the management of your incapacity. Most people want to avoid probate because an administration proceeding generally costs between four to eight percent of the gross value of the assets and take a minimum of nine months, if not several years, to administer. In local cities such as Manhattan Beach or Santa Monica, where home values average close to $1,000,000, probate fees and costs can easily exceed $40,000 or more. A trust also allows incapacity management because if you (as the trust creator or ‘settlor’) are deemed to be incapacitated (such as by a stroke), the trust agreement usually allows your named successor to assume control of your trust estate. Thus with a trust your assets can be managed for your benefit without having to file a court proceeding.
In addition to these foundational benefits, trusts can also be designed to create a host of other benefits for the settlor including some protection from estate taxes, delayed and managed distribution of your assets for dependents, and some protection from potential creditors. All of these benefits usually require that a person spend more money preparing the estate plan, but given the various benefits for most people, the investment is usually money well spent.
In summary, a will-based estate plan is frequently ideal for those with minimal non-real estate assets. For those individuals with real property holdings, dependents including minor children, or a reasonable asset base, a trust-based estate plan usually is the better choice.
