GF593 Unit 6 Unfunded Trust Seminar Reflection Example

The Trust Nobody Filled: A Unit 6 Seminar Reflection on Who Owns the Funding Problem

[Student Name]

Purdue University Global

GF593: Estate Planning

Unit 6 Seminar Reflection

[Instructor Name]

[Date]

The widow, her advisers, the amounts and the classmates are composite; the professional standards and sources cited are real.

The Case and My First View

The facts were simple. A widow in her late seventies signed a revocable trust and a pour-over will. She then lived nine more years. Her house, worth $540,000, stayed in her own name, and so did her brokerage account, worth $420,000. Only a certificate of deposit had ever been opened in the trust's name. When she died, $960,000 passed through probate under the pour-over will, which sends probate property into the trust only after the court process ends. The estate took fourteen months to close, and the executor estimated costs near $38,400, about 4 percent of the probate property.

My notes before the seminar said: "The attorney drafted a trust to avoid probate and then let her leave without funding it. That is the attorney's failure." I thought the answer was obvious, and I expected the discussion to confirm it.

What Changed My View

A classmate who works in a law office asked to see the engagement letter in the case packet, which most of us had skipped. It limited the attorney's work to drafting the documents and preparing one deed. It stated that retitling accounts was the client's responsibility, and it attached a page of written funding instructions. The deed had been prepared but never signed and recorded. The attorney had done what the letter promised, and the client had been told, in writing, what remained.

Then another classmate asked who had looked at the widow's statements every year after the signing. The answer was her financial planner, who managed the brokerage account. For nine years that planner had held annual reviews with her, and every statement showed the account titled in her own name, not the trust's.

The person best placed to notice the empty trust was not the one who drafted it but the one who reviewed her accounts every year and never asked whose name was on them.

What the Instructor Added

The instructor asked us to read the duty of care in the CFP Board's standards. A planner must act with the care, skill, prudence and diligence a prudent professional would use, given the scope of the engagement (CFP Board, 2019). This planner's engagement included estate planning coordination. Checking that the client's accounts matched her estate plan was squarely inside that scope. I had been treating funding as a legal step, but the instructor's point was that it is also an account-titling step, and account titling is something planners see every time they open a statement.

Why I Missed It

My error came from assuming the document was the plan. A trust feels like the finished product, and the attorney feels like its owner. But a revocable trust controls only what is put into it, and most of what people own today moves by account registration and beneficiary forms rather than by documents a court reads (Langbein, 1984). The trust was a container, and nobody kept checking whether anything was in it.

How the Discussion Changed the Room

At the start, almost everyone blamed the attorney. By the end, the room had split three ways. Some put most of the responsibility on the planner. Some argued it was shared, since the client herself received written instructions and never followed them. Two classmates still held the attorney responsible for not insisting on recording the deed before closing the file. I found that last view more persuasive than I expected, because a deed prepared but left unsigned looks like a task half finished.

My Revised View

I now think the responsibility was shared, but the planner held the largest share, because only the planner had a recurring, scheduled chance to catch the problem. The attorney's engagement ended. The client's instructions were a page she read once. The planner saw the account title every year. Standard texts on trusts make the same point in a drier way: an unfunded revocable trust does nothing to avoid probate, however well it is drafted (Sitkoff & Dukeminier, 2022).

What I Will Do Differently

I am adding two questions to every annual review I conduct, for every account on the statement: "Whose name is this account in?" and "Who receives it when you die, and does that match your plan?" If either answer does not match the documents, the review is not finished until it does.

The Question Left Open

I am still unsure how far a planner's duty reaches when the client has been told what to do and simply has not done it. At some point repeated reminders become pressure. I would like to know how experienced planners decide when to stop asking and start documenting that they asked.

References

CFP Board. (2019). Code of ethics and standards of conduct. https://www.cfp.net/ethics/code-of-ethics-and-standards-of-conduct

Langbein, J. H. (1984). The nonprobate revolution and the future of the law of succession. Harvard Law Review, 97(5), 1108-1141. https://doi.org/10.2307/1340825

Sitkoff, R. H., & Dukeminier, J. (2022). Wills, trusts, and estates (11th ed.). Aspen Publishing.