Many people are interested in creating a living trust in California to avoid probate and to enjoy many of the other advantages that a living trust provides. But not everyone understands how to administer a trust in California after the death of the trust’s initial creator, often called the settlor. There are many rules you need to know if you find yourself in this position. A California trust administration attorney can answer your questions, draft your trust documents, and help you administer the trust.
Notifying Creditors and Beneficiaries
The first step for a trustee, once the original settlor dies, is often to reach out to all the beneficiaries and potential creditors. Beneficiaries need to know that they are named in the trust. Known creditors, like the doctor and hospital involved in the settlor’s final illness, need to submit their final bills if they want to be paid.
Creating an Inventory of the Assets
One of the main functions of a living trust is to distribute a person’s assets after they die. You need to find out all the property the decedent had. Most of it should be titled in the name of the trust. But other assets intended to be in the trust might not bear the correct title.
It can take quite some time to discover all the assets. Sometimes, the trustee needs to wait until the annual tax documents arrive to complete the inventory.
Managing the Assets
A trustee has a duty to manage the assets of the trust and preserve the assets’ market value to the greatest extent possible. The trustee will want to find out how the assets are titled, have appraisals performed, and determine what needs to be done to manage the different types of assets.
Some assets, like large amounts of cash, might need to be invested for the period of trust administration. If the decedent owned real property, the trustee may need to engage in property management, for example, renting, selling, maintaining, repairing, and securing the property.
Evaluate Debts and Other Claims
When the bills come in, the trustee will need to evaluate these debts to make sure they are valid. Once the trustee analyzes all claims against the estate, he or she should pay the valid debts. Be sure to keep a careful accounting of all debts paid. Include all details you have about the debts that got paid as well as the ones that you denied.
Prepare Tax Filings
You will need to prepare, or hire an accountant to prepare, the personal income tax return for the decedent’s last year of life and the estate returns for each year or partial year that the estate remains open and the trust administration continues.
Keep Careful Records
California requires trustees to keep accounting records. You will want to use the correct forms required by law. Beneficiaries have a right to receive an accounting. Failure to create the accounting can be grounds for a judge to remove you as a trustee.
Formulate a Plan of Distribution
After paying all the debts of the estate, you will want to devise a plan and schedule for the distribution of assets to the beneficiaries. Memorialize this distribution plan in writing and share it with the beneficiaries.
Settle the Trust
When wrapping up the estate, you will want to resolve any remaining disputes. You can then make the distributions after getting the consent of all beneficiaries. The distribution of assets will involve retitling assets from the name of the trust to the name of the recipient. After all distributions are complete and all expenses of the administration are paid, you will need to close out the trust accounts and prepare the final accounting.
Hiring a Professional to Help You Handle the Trust
You do not have to do all of this work by yourself. You don’t need to put your life on hold for months because someone named you the trustee of the living trust. A California estate planning attorney can take care of many of these steps for you so that you can get back to your own life. Contact our office today for legal assistance.