Sunday, June 26, 2022

What you need to know about administering a trust after death

Probate in California is expensive, time-consuming, and public.

As a result, living trusts are an increasingly popular tool for avoiding probate and maintaining confidentiality.

However, after the death of a trustor (the person creating the trust), there is still a legal process to follow, and often involves an attorney, and perhaps an accountant. This process is known as “trust administration” and involves complying with the terms of the trust and the laws governing trusts.

Our next four columns will focus on trust governance.

first step

When a trustee dies, the trustee of the trust has a number of duties that he must participate in. What is involved in trust administration depends on who the beneficiaries are, the terms of the trust, and the type of assets the trust owns. First, the terms of the trust should be carefully reviewed.

Trust Administration Information.

Thereafter, notices are to be given:

1: The will—commonly called a “put-over” because it “puts” into a trust that isn’t already in the trust—must be filed in probate court within thirty days of the date of death. This does not start a probate process, but rather prevents someone else from starting probate with the old will.

2: Any beneficiary under the trust who is not also a trustee receives a specific notice under the Probate Code informing the beneficiary that the trust exists, who the trustee is and where the trust is being administered. The beneficiary is also informed that he has the right to a copy of the trust upon request, and that he has the right to file any claim objecting to the trust or any of its terms within 120 days of the receipt of the notice Is.

3: Heirs (those who would be heirs if there is no will or trust) are also entitled to the same notice as the beneficiaries. In other words, even if one inherits, they are entitled to a copy of the trust and they have an objection period of 120 days.

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4: Notice must also be sent to the IRS as to who (the trustee or executor of the will) will handle tax matters on behalf of the deceased.

tax ID number

After the death of a trustee, the decedent’s Social Security number is no longer valid. Thus, the trustee must obtain a new tax ID number for the trust.

marshalling property

When a living trust is properly created, the assets are titled in the trust’s name. For example, when Jane Smith forms a trust, the title of her home and her bank accounts will be something like “Jane Smith, Trustee of the Jane Smith Trust as of April 20, 2022.” When Jane Smith dies, documents will be needed to secure the assets in the name of the successor trustee.

1: A certification of the trust is prepared and, when signed and notarized by the new trustee, along with the death certificate, is used to transfer title to the property (other than real property) to the name of the new trustee can be done. For example, the title would be changed to “Paul Jones, Trustee of the Jane Smith Trust dated April 20, 2022”.

2: An affidavit of the trustee’s death must also be filed in respect of any real property. Please note that unless a surviving spouse is the beneficiary, the estate will be reassessed for estate tax. (Proposition 19 omitted the parent-child transfer reassignment exclusion under the very fewest circumstances.)

taxes

The value of the property as on the date of death should be determined and valuation obtained. The value determines whether an estate tax return is required and establishes the income tax base that the beneficiaries have in the estate.

The deceased’s final income tax return must be filed, along with an estate tax return if necessary.

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living spouse

If there is a surviving spouse and the trust says “all assets go to my spouse,” the surviving spouse’s Social Security number can be used. It is possible that notices to the beneficiaries and heirs may not be necessary, but this is dependent on other terms of the trust. The types of documents required to change the title on the property may also differ.

If you are the surviving spouse of a joint trust, it is important to seek legal advice on trust administration, even if you believe the trust is simple. The trust may contain provisions that require action on your part.

Management and distribution of assets

After the initial administration steps, the trustee is charged with managing the trust’s assets, which may include selling or liquidating certain assets.

If the trust demands immediate distribution to the beneficiaries, certain actions and documents will be required to complete the distribution after the 120-day claim period is over.

If the trust requires the trustee to keep and manage the assets until a later date, the terms of the trust should be carefully reviewed to determine the trustee’s income and the duties of the remaining beneficiaries, and are subject to specific circumstances. can be distributed under

Trusts can serve a number of goals, from estate planning, to avoiding probate, and to maintaining confidentiality. However, there are laws to be followed in the administration of trusts, and interests are to be sought.

The job of a successor trustee is an important task and often requires the assistance of professionals. Our next column will discuss this further.

Teresa J. Raine is an attorney practicing in Estate Planning and Trust Administration in Riverside and Paso Robles, CA. You can reach him at Teresa@trlawgroup.net. can contact on

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