Estate Administration Attorneys Helping Families and Their Loved Ones Throughout California

When a loved one passes away and you’ve been named as the trustee, not only is it heartbreaking, it can also be a very overwhelming process. There are many steps that have to be taken, including crucial deadlines that must be met. It’s important to know what things you need to be aware of and what your job as trustee requires.

What is Trust Administration?

In a nutshell, trust administration involves the various steps that are taken after somebody dies to wrap up their financial affairs. It includes paying bills, filing tax returns, keeping beneficiaries informed, lodging the original last will and testament with the court, sending out legal notifications, among many other things. There are many tasks that require the trustee’s attention, and it can be difficult to know where to start.

What Does a Trustee Do When Somebody Dies?

Each estate plan is unique and the process is going to vary depending on several factors, such as the types of assets, the size of the estate, and the number of beneficiaries. There’s not necessarily a one size fits all process. However, it’s possible to discuss a general overview of what typically happens in a trust administration. There are usually four stages that occur in a trust administration.

Stage#1 – Gathering Assets – One of your first jobs as trustee is to compile a list of all the assets in the trust. As trustee you hold legal title to trust assets and you need to know what assets you’re in charge of. The process of administering a trust is going to involve dealing with lots of assets. For example, the assets would include bank accounts, investment accounts, IRAs, 401(k)s, real estate, personal property(such as vehicles or furnishings in the home), and life insurances. Sometimes the person who died left a list of assets for the trustee’s benefit. Other times, you have to do some digging through financial statements to discover what assets you’ll be dealing with.

Stage #2 – Asset Registration – Once you have a good idea of what assets you will be dealing with, you’ll then need to update the registration on those assets. This means your name will need to appear on those assets as the successor trustee. Most of the time you’ll find that the assets are titled in the name of the person who passed away, either as trustee or as an individual. If the assets are in the trust, the financial institution will generally require a copy of the trust, the death certificate, and the trust’s tax ID number. If the assets are held in the decedent’s name alone as an individual, it may require a small estate affidavit, or in some cases (depending on the asset’s value) a court proceeding known as probate. Once you have access to the financial accounts, you can pay final expenses and prepare the assets to be distributed to the beneficiaries.

Stage #3 – Legal Notifications – Which legal notices you need to send out as trustee will vary depending on the type of estate and the type of trust, but there are usually two types of notices that are required every time. First, you have to send a statutory notice by mail to all beneficiaries named in the trust. You will also need to include any disinherited individuals, and in some cases the contingent beneficiaries as well. The original last will and testament must be lodged with the probate court. Although these notices are part of stage three, they often are handled when the trust administration begins as these notices have statutory time requirements that are important to follow. Missing the deadlines on these requirements can make you as trustee personally liable.

Stage #4 – Distribution of Assets – The final stage is to distribute the remaining assets to the named beneficiaries. At this point you should have control over the trust assets and will be in a position to distribute them as provided in the terms of the trust. The trustee does not have discretion to make changes to the trust distribution. When a person passes away, the trust becomes irrevocable and it’s your job as trustee to ensure that those assets are distributed according to the terms of the trust. Some trusts will require that the assets are distributed directly to a beneficiary. Other times the assets are held in a separate trust for the benefit of the beneficiary. And other times the assets are given out in staggered distributions over a period of years. Make sure that you know what the trust requires and how it’s written to avoid any potential liability to you as trustee.

Do You Need to Hire an Attorney to Help?

Legally there is no requirement that the trustee hire an attorney. However, as a general rule, it’s usually a good idea for the trustee to get assistance from an experienced estate planning attorney.It would be nearly impossible to explain everything that needs to be done as trustee including all the various steps and forms that must be completed. Most books written on the subject are too complicated to follow and can’t give specific advice on your situation.

Every estate is unique, has different challenges and requirements, and it’s important for you as trustee to get sound advice so that you know exactly what you’re doing so you don’t become personally liable. Most trusts will authorize the trustee to use trust assets to pay for an attorney to guide the trustee through the administration process.

What is the Next Step?

If you’ve been named as a trustee and you’d like to discuss your role in more detail, call our office and we’ll schedule a complimentary 15-minute consultation with one of our attorneys (if you are named as trustee over one of our trusts that we prepared, the complimentary consultation is 90 minutes). During that meeting, we’ll review what you need to do as trustee, the specific steps you’ll be taking and how we can be involved to help with those steps. We’ll also quote you a flat fee for our assistance so there are no surprises. Nobody hates hourly billing more than us and we believe in being transparent and fair with our clients.