How to Administer a Trust
The Trust Administration process can be very time-consuming depending on the circumstances on the case and whether the Trustee decides to hire an attorney for assistance or to handle it themselves. Settling a large estate with multiple beneficiaries and several accounts and properties is obviously going to take more time to complete than a modest estate with only a few accounts and properties. Remember, as a Trustee, it is important to responsive and efficient with the attorney, because lack of response can lead to complications such as tax issues, title problems, and disagreements with beneficiaries. Most Trust and Estate litigation cases start simply because of the Trustee’s lack of communication with the beneficiaries and the Trustee’s lack of knowledge of their duties and responsibilities.
While the following is not a complete guideline of the steps a trustee must take to administer a trust, it provides a brief overview of what needs to be done:
- Complete Funeral Services and Take the Time to Mourn: Remember that this is a difficult time for the family and loved ones, so take this time to process the death and mourn for the passing of your dearly departed.
- Obtain Original Death Certificates and Gather All Estate Planning and Financial Documents: Start gathering the necessary documents needed to begin the Trust Administration process.
- Hire an Attorney: Look diligently for an experienced attorney that has years of Trust Administration practice and set up a consultation.
- Give the Beneficiaries Notice: Trustees are required by law to notify all heirs and beneficiaries by a certain time. There is a specific legal form that is required to be mailed to the beneficiaries. At this time, it’s also advisable to give notice to creditors as well, depending on the case.
- Identify Trust Assets, Obtain Titles and Appraisals: Trustees are held liable if anything happens to the trust assets, such as theft, loss or destruction. As such, it is critical to identify what exactly is in the Trust. The title to assets also needs to be obtained, whether they are owned by the trust or the decedent individually. This will allow the successor trustee to see what assets the settlor may have neglected to transfer to their trust. Lastly, the successor trustee will need to obtain appraisals for real estate or valuable tangible personal property.
- Obtain a Taxpayer ID Number for the Trust: A revocable trust becomes irrevocable upon the settlers passing and can no longer be taxed under their social security number. The trustee must obtain a new Taxpayer ID Number (also known as an EIN) with the IRS.
- Pay Debts: Failure to securely pay debts and creditors can result in personal liability to the trustee.
- File Tax Returns: It is the Trustee’s duty to file all remaining tax returns with the assistance of a tax professional. This includes personal returns, trust taxes, and taxes due from the estate.
- Prepare an Accounting: The trustee also has a legal responsibility to prepare an accounting of trust assets for the beneficiaries. The contents and outline of the accounting are prescribed by the California Probate Code.
- Distribute Trust Assets: And lastly, the Trustee must take the correct steps to transfer titles, prepare deeds, and distribute the Trust, along with other tasks required to settle the Trust.
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