After the creation and funding of your trust, administering your trust is the next most important activity to occur. You may wonder what is involved when your successor trustee administers your revocable living trust following your death. Here are some of the primary actions your successor trustee will need to take:
Trust Administration Tasks and Notifications
The initial tasks of trust administration entail securing your estate and sending various notifications as required by California law.
- Arrange for the on-going care of your pets; secure your home; and make the final arrangements for the disposition of your body.
- Order several Death Certificates through the mortuary to be used in connection with closing financial accounts and transferring title to real property.
- Mail out “Notice to Beneficiary/Heir” letters, as required by California law, informing your beneficiaries that the administration of your trust has begun.
- Notify the California Department of Health Care Services as required by California law if you received or may have received any benefits from Medi-Cal.
Accounts and Appraisals
Trust administration requires the trustee obtain a trust account and ascertain the date of death values for your estate.
- Obtain preliminary value of your estate to determine whether a federal estate tax return may need to be filed with the IRS (this should be filed within nine (9) months from the date of your death).
- Open a new checking account in the trust name (or convert an existing account). This account will be used to pay all of your debts and on-going trust expenses. In this connection, obtain from the IRS a new income tax reporting number (EIN) for the trust which the bank will require, since your trust became irrevocable upon your death.
- Transfer title to all financial/brokerage accounts from your name into the successor trustee’s name, or close (sell the assets in) all or some of such accounts and transfer the proceeds into the new account in the trust referred to in Paragraph 6 above.
- Locate all outstanding bills and pay same from the account referred to in Paragraph 6. above.
- Make claim for any death benefit(s) payable on your death.
- As to any personal property in your estate, have an appraisal of such property made by an estate personal property appraiser, and sell such property and deposit the sale proceeds into the trust bank account, or divide such property among the entitled beneficiaries based on value or as otherwise required by the terms of your trust.
- Obtain date of death values of all other property in your estate.Your banks and brokerage firms can provide the trustee with a statement(s) covering the time of your death and/or a letter providing the date of death value(s) of such account(s). The trustee will probably need to hire a qualified real estate appraiser to value your real property(ies) (needed for income tax basis purposes).
Administration and Distributions
Successful trust administration involves distributing your estate according to the terms of your trust, but it also involves accountability on the part of the trustee.
- The trustee should keep a good record of all trust income and expenses and trust distributions, since an accounting should typically be provided to each beneficiary at the end of the trust administration.
- The trustee should pay to himself or herself the compensation he or she is entitled to under the terms of the trust; and if none is provided for, “reasonable compensation” as authorized by California law.
- After all estate expenses and debts have been paid, make the distributions to your beneficiaries called for by the trust.
- Have an accountant prepare and file the needed income tax returns for you and for the trust.
The above statements are generalizations only and are not to be taken as legal advice for the reader’s particular situation.