Father’s living trust is missing

Money Talk

Dear Liz: My 82-year-old father, who is in a nursing home after multiple strokes, had always told me that he set up a revocable living trust for himself and my mom. I’ve been going through his papers and can find only unsigned copies of his trust.

My dad now suffers from some dementia, and my mom knows nothing about where he might have put a copy of the trust. I do not think a lawyer was involved.

I am worried about what will happen when my dad dies. Are revocable living trusts recorded somewhere? If so, how do I find his? Can my mom set up a new trust? They don’t have a lot of assets -- just a house and car -- so am I worrying needlessly?

Answer: Your dad can’t sign the copies or have a new trust created if he’s not mentally competent -- and with the strokes and the dementia, he’s probably not, although you’ll probably want to consult a lawyer. Without a durable power of attorney, no one else can have estate documents created for him, either.

Living trusts aren’t recorded anywhere. If you can’t find a copy of it and if assets, such as the house, weren’t transferred into the name of the trust, you can’t use the unsigned copies to avoid probate, said Burton Mitchell, a Los Angeles estate planning attorney with Jeffer, Mangels, Butler & Marmaro.

“This is like the tree falling in the forest” with no one to hear it, Mitchell said. “If no one can find a living trust, I guess it doesn’t exist.”

You may want to expand your search. Check your dad’s papers for any bank he may have done business with, and find out whether he had a safe deposit box there. If he didn’t trust a bank with the document, it may be hidden somewhere in the house. Estate appraiser Julie Hall, author of “The Boomer Burden: Dealing With Your Parents’ Lifetime Accumulation of Stuff,” said heirs have found documents hidden in freezers, taped to attic rafters, tucked under mattresses and slipped behind the mats of framed pictures, among other places.

Review your dad’s checkbook around the period when the documents were created, if possible. If a check was made out to an attorney during that time, the signed document may have been filed with him or her.

It’s worth putting some effort into this search. A house in California can be a considerable asset. Unfortunately, probate in California is expensive and slow. That’s why many people with even modest assets opt for a living trust: to bypass probate and save their heirs money.

The house may be able to avoid probate if it’s titled in joint tenancy, Mitchell said. In that case, if your father dies first, your mom will inherit it and then could create a living trust of her own.

Cosigner’s credit is getting trashed

Dear Liz: I cosigned for a truck six years ago for a friend whose family was in trouble. He missed four payments, and even though I made more than $2,000 of payments for him in an attempt to keep my credit reports clean, my scores have been seriously damaged.

Is there any way to clear this up, or does a good turn remain unrewarded -- and for how long?

Answer: The phrase you’re looking for is “No good deed goes unpunished,” and cosigning a loan for someone who doesn’t make the payments is a punishing experience indeed.

There is no way to clear up this mess. You put your good credit in your friend’s unworthy hands when you cosigned the loan. What’s more, since you had good credit and your friend didn’t, each late payment actually hurt your credit scores more than they hurt his.

If the loan has been paid off, your friend won’t be able to do further damage to your credit, but it will take a while for your scores to return to their old levels. The late payments will remain on your credit report for seven years, although their effect will fade over time if you handle the rest of your credit responsibly.

If the loan is still outstanding, you might want to seriously consider paying it off so that your friend can’t inflict fresh injury on your scores.

Liz Pulliam Weston is the author of the book “Your Credit Score: Your Money and What’s at Stake.” Questions for possible inclusion in her column may be sent to 12400 Ventura Blvd., No. 238, Studio City, CA 91604, or via the “Contact Liz” form at Distributed by No More Red Inc.