A living trust consists of many different components. The Trustor / Settlor / Creator (hereinafter referred to as “Trustor”) is the individual who has created the living trust. In the living trust, the trustor names a trustee who has the task of administering the living trust. When the trustor passes away, then the trustee must step-in and administer the living trust. For trustees, it is often difficult to know where to start. Following is a list of the initial action items which you may want to consider taking when commencing a trust administration.
The first matter has to do with final arrangements. If there are instructions left by the trustor, the trustee or the next of kin must follow any instructions left by the trustor regarding his or her wishes. When making the final arrangements, the funeral home will ask how many death certificates should be ordered. Oftentimes, a dozen or more certified death certificates are ordered; however, this number may not be necessary. My rule of thumb is to order at least five and perhaps more, depending on the number of assets that the trustor owned. If you find out that you need additional death certificates, copies can be obtained from the county office which administers the vital records, in the county where the trustor died. Death certificates will be necessary to consolidate accounts and administer the estate.
Next, you may want to make a list of all of the assets and debts. For the assets of the estate, you will want to ensure that all real property is titled in the living trust. You will also want to ensure that the mortgage, homeowner’s insurance, and property taxes are paid. The trustee should make sure that the real properties are locked and secured. If the real property is not titled in the trust, then other steps may need to be taken to correct the title. For the rest of the assets, you will want to create a list of all bank accounts, brokerage accounts, U.S. Savings Bonds, IRA’s, 401(k) or annuity accounts. It is imperative to make a complete list of all assets and debts. If it is a beneficiary driven asset, such as an IRA, 401(k) or annuity accounts, notices will be sent to the beneficiaries so they can submit the appropriate documents to have these accounts transferred.
The next step is to send out the notifications which are required by California Probate Code Section 16061.7. These notifications are sent to all of the beneficiaries. These notices must be sent in accordance with the requirements delineated in the code section.
The trustee will also need to obtain an Employer Identification Number (“EIN”). This is obtained by going to the IRS website and requesting the EIN. The EIN will be used in lieu of the decedent’s social security number. The decedent’s final tax return will need to be filed and each year that there are taxable assets in the estate, a tax return will need to be filed. You may want to find a tax preparer who can prepare these tax returns.
Finally, the trustee will want to keep a full and complete accounting of all debts paid and checks received.
A trust administration requires a number of different actions before the assets of the estate can be distributed to the beneficiaries. So long, as the trustee follows the requirements and documents his or her actions then the living trust can be easily administered.
Source: Affinity Trusts. Not affiliated with KeyPoint Credit Union.