What is Trust Administration?
Trust administration is defined as the trustees’ management of trust property according to the trust document’s requests and for the benefit of the beneficiaries after the settlor’s death. Many steps are required to provide an effective administration. It’s recommended to work with an attorney to help in the process.
Trust administration starts with a mandatory notice to all the beneficiaries and the settlors’ heirs. After notice, the beneficiary has a certain amount of days to file a trust contest. If no contest is filed within this time frame, the beneficiary may surrender their ability to file it.
If the trust holds real property, the next step is to bestow title in the successor trustee to ensure that the property will be handled according to the settlor’s wishes. To accomplish this, an affidavit should be recorded with a certified copy of the death certificate against each real property held in the living trust. This process transfers the property’s title from the deceased settlor to the new trustees. A change of ownership form is typically sent to the county assessor simultaneously with the affidavit. Finally, if the trust transfers real property from parents or children by any means exempt from property tax reassessment, the trustee must complete the proper exemption form. An attorney is recommended to help prepare these documents.
Once the real property has been handled, the trustee will need to ascertain all other trust assets, such as bank and investment accounts, and transfer the title of those assets into the trustee’s name as the successor trustee. The trustee needs first to acquire the trust’s federal tax identification number so that any income earned from the accounts in the name of the trust is correctly reported to the IRS.
The successor trustee is required to pay the settlor’s debts and satisfy his or her liabilities. Taxes can be particularly complicated because both estate and income taxes may be owed if the estate is sufficiently large. To assess whether it is necessary to file a federal estate tax return for the settlor, the trustee needs to calculate the value of the decedent’s estate. If the value exceeds the exemption amount, the trustee must file the federal estate tax return form. It is highly recommended to work with an attorney to determine whether a federal estate tax return is necessary.
Most jurisdictions require that the trustee keep a detailed accounting of the trust. This involves using trust funds to wind up the decedent’s affairs, overseeing all trust activity, including deposits and distributions from the trust, and reviewing the document to determine the appropriate accounting mode.
We’re Here to Help
The trustee should meet with an attorney at the onset of the administration process to assess the extent of his or her accounting obligation. For more information, contact Hudack Law today at (877) 314-4309 Toll-free, please visit areas of service (open link in a new tab) or hudacklaw.com (open link in a new tab).