Trusts have been gaining in popularity in recent years, as more people learn about the many benefits they can provide when used as part of a comprehensive estate planning strategy. For the grantor and beneficiaries of any trust, those benefits can include everything from tax savings and efficient financial planning to reduced asset transfer delays, increased privacy, and more. For the successor trustee charged with eventual administration of the trust, however, the role comes with an incredible array of duties. If you’ve been tasked with trust administration, it is important to understand those duties and know where to go to get the help you may need.
Administration Checklist
The role of successor trustee is vitally important to the success of the trust. While your duties don’t actually begin until the grantor dies, it is critical to understand what will be expected of you when that time comes. Fortunately, there is an order to these things that can make trust administration far less stressful than it might initially appear.
- Get organized. If you know that you were named as the successor trustee, then the first thing to do is gather together all of the deceased’s important estate planning documents. These include things like the Trust agreement, and power of attorney documents that he created, the pour-over will, and similar documents. Naturally, documents like a living will or advance health care directive can be ignored at this point since they were invalidated by the decedent’s death.
You’ll want to spend some time reviewing all of these documents. Identify the beneficiaries listed in the trust agreement, as well as the plan for distributing assets. At this point, it is a good idea to create a list that includes their names, contact information, and other important details so that you have an easily-accessible resource for contacting them when necessary.
- File notices. The will needs to filed with the Probate Court as soon as possible. If there is a named executor for the will, then you’ll have to contact that person to coordinate the filings. If you are named for that role too, then the responsibility falls to you. In addition to filing the will, you also need to record the decedent’s death certificate in any county where he owned property, and file for a tax ID number for the trust. It is typically wise to consult with an attorney early on so that you can get the guidance you need to ensure that all of these filings are done correctly.
- Make sure you have the authority you need. Before you do anything else, you need to verify that you have the authority needed to fulfill your role. That’s why it is so important to gather all of the requisite documents – signed trust agreement, death certificate, and so on – before proceeding any further.
- Notify all interested parties. You are required to notify all interested parties to let them know that you have accepted the trustee role. These notices must be sent to the beneficiaries, the decedent’s bank, utility services, insurers, the Social Security Administration, postal service, and any credit card companies that the deceased used. Again, an attorney can be an invaluable asset when it’s time to sort through the notification process.
- Gather the assets. One of your first duties as trustee will be to identify and take control of the deceased’s assets. If you’re fortunate, he or she will have maintained a complete list of accounts, properties, and other assets. If not, you’ll have to identify them through other financial records. Once you’ve done so, you have to gather all of the ownership documents, including mortgages, contracts, titles, and so on. You need to make sure that everything is titled in a way that recognizes your authority as trustee to enable you to properly manage the assets.
- Get an assessment of the value of the assets and estate. You’ll need a complete inventory and valuation of assets to send to beneficiaries.
- Make sure that any necessary claims for death benefits and insurance are filed.
- Develop an estimate of the costs associated with settling the estate, including service fees and taxes.
- Identify and settle any debts. Your duty in this area includes determining the validity of each debt claim and prompt settlement of the amount owed.
- Manage the trust. This includes receiving the trust’s income, managing investments and real property, maintaining insurance for all properties, and diligently recording all estate transactions.
- File tax returns. That includes not only the income tax returns for the trust, but any estate tax filings that may be required.
- Fulfill the terms of the trust. Once debts and taxes are taken care of, you need to follow the terms of the trust and distribute assets to beneficiaries. In some cases, you may simply have to distribute the entire estate in accordance with the trust’s terms. In others, you may need to make partial distributions over time, hold assets in trust for minors or disabled heirs, or follow other specific distribution instructions.
Why You Need Help
As you can see, there is much more to trust administration than just signing documents for the deceased or doling out inheritance money. It is a complex process that comes with a fiduciary duty to the trust and its beneficiaries. And if you’re not completely familiar with all of the nuances of the administration process, it can be easy to make a mistake that could leave you personally liable. To avoid that, experts recommend that you consult with an experienced trust attorney early in the process.
At Frank & Kraft, Attorneys at Law, we have the experience and expertise you need to ensure that your time as a trustee is as rewarding as possible. Trust administration involves complex legal processes that can be difficult for most people to navigate, but our estate planning experts can help to make the process far simpler than you might have ever imagined. To discover how we can assist you with your duties as a trustee, contact us online or call today at (317) 684-1100.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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