Trustee of a Revocable Living Trust: Now What?
Six Steps for a Trustee
Whether you’re a child of parents who recently passed away or a friend of someone who entrusted you with their estate, it can be challenging to know
what to do when you’re appointed as a trustee. Especially if you’ve never done it before. A qualified estate planning attorney can help.
1. The Trust Estate
The first step is to work with your estate planning attorney to identify all assets in the trust estate. Then, gather the related documentation. This would include making sure you have the living trust and any amendments, as well as the pour-over will. The trust estate is simply all assets included within the trust. This could include: real estate, securities, bank accounts, etc. Such assets may also include the items in the decedent’s will if it is a pour-over will. This can be a difficult task if the decedent did not organize their assets.
Sometimes it requires some investigating to learn what assets are included in the trust. This can be done by Trustee. An estate planning attorney can also help. The trustee can use trust funds to hire a private investigator or pay for a global asset search. It’s important to remember that trust funds are to be used for reasonable costs and expenses of administering the trust. This includes attorney’s fees. This initial stage may be easy if the Grantor did a good job keeping track of the trust assets. If not, you may have your work cut out for you.
2. Trustee Gets the Help of an Expert
It would be a good idea to meet with an estate planning attorney from the beginning if you are unfamiliar with the duties of a trustee and what needs to take place to administer the trust. A good estate planning lawyer can help you navigate through wills and trusts laws and the process. You can decide what you want help with and what you’d like to delegate to the estate planning attorney. A good estate planning attorney can also help you to determine whether you need to go through the probate process for any of the decedent’s property.
3. They Pay any bills and expenses
When a person passes away, it doesn’t mean that their financial obligations stop. The trustee usually has the burden of ensuring that bills get paid. This would include the reasonable expenses of administering the trust, such as estate planning attorney fees, any accounting fees, utilities bills and insurance payments to name a few.
4. Trustee Gets Appraisals Where Needed for Value of Assets
In order to properly administer the trust, the trustee needs to know the value of the trust assets. In order to do this work, you’ll need a copy of certification of the trust and the death certificate of the decedent. This gives notice to others that you are the trustee and have permission to act according to the wishes of the decedent. Once you know the value of the assets that are not passing directly to a beneficiary, you can liquidate those assets by selling them and dividing the proceeds as directed under the trust.
5. Pay Any Taxes on the Estate
It is important to pay any income tax or death tax that may be due. Applicable income tax would be any income that the decedent made for which taxes have not been paid, as well as any income the estate generates. If you don’t know any CPAs or accountants, your estate planning attorney may have some referrals for individuals you can trust.
6. Trustee Follows the Distribution Schedule in the Trust
One of the most important things the trustee needs to remember is that there may be some hidden expenses that may crop up after the first six months of the decedent’s death, so it is important to set aside some money from the trust before making any distributions to beneficiaries. If the trustee distributes all of the trust and dissolves it and a creditor comes calling, it is going to be very difficult to get any money back from the beneficiaries (if they still have it). It’s better to plan ahead and keep a sufficient amount in the trust before finally terminating.
Savvy trustees will work with an estate planning attorney and an accountant to make distributions to beneficiaries over a period of time, so that when unforeseen expenses come up they are not caught without the funds to pay them.
If you are in a situation where you are the executor or trustee of an estate, please call Probate Law Group at 480.535.8000. We can help.