Probate proceedings in California can be lengthy and expensive, and many individuals and families can therefore benefit greatly by creating a trust. Not only does a trust avoid probate, which maintains the privacy of the financial arrangements, a trust can also minimize estate taxes and help to plan for incapacity. Nonetheless, all trusts must go through a trust administration phase upon the death of the settlor (the person making the trust) to execute and carry out the terms of the trust.
The trust and estate attorneys at Loew Law Group, PLC, have working knowledge of the complicated trust administration process in California. We routinely provide advice and guidance to trustees on fulfilling their fiduciary duties and also work with beneficiaries to protect their rights. In the event of disputes, we provide our clients with powerful legal representation inside or outside of the courtroom. When you work with us, you can rest assured that your interests will be protected.
What is the role of a Trustee in the Trust Administration Process?
It is important to note that a trustee in California is considered to be a fiduciary, which places the trustee in a position of trust with the beneficiaries. This means that a trustee must adhere to the highest ethical standards and can be held liable for mistakes or misconduct. In particular, a trustee must always act in the best interests of the beneficiaries and preserve the value of the assets when administering the trust.
At Loew Law Group, we assist trustees with carrying out their duties, such as:
- Notifying beneficiaries and other interested parties of the grantor’s passing
- Inventorying and appraising trust property
- Transferring property into the trust
- Obtaining tax ID numbers
- Assisting tax preparers and accountants with filing tax returns
- Trust accounting
- Distributing the assets to the beneficiaries
Depending on the value of the estate assets, administering a trust can be challenging. If the trust contains significant assets, principal and income may need to be distinguished according to the terms of the trust.
As an example, income may be initially distributed to one beneficiary, while the principal is subsequently distributed to that same or another beneficiary. Another common arrangement is for an inheriting spouse to only receive income, while the principal continues to be held by the trust and can only be used for a medical or other emergency.
Obviously, the proper administration of a trust requires the trustee to be ethical and capable. Moreover, it is not uncommon for conflicts to arise among the beneficiaries, which can further complicate the trust administration process. Loew Law Group, PLC is highly regarded for helping our clients navigate the trust administration process and avoid common mistakes that could result in litigation. In the event of a dispute, we may recommend a negotiated settlement, but our trial attorneys are equally comfortable in the courtroom.
Preparation of Trust Accountings
Although trusts are typically administered without judicial intervention, the California Probate Code generally requires trustees to provide annual trust accountings to beneficiaries who are currently entitled to receive income and principal during the accounting period. Generally, a trust accounting must disclose the assets and liabilities of the trust, disbursements of principal and income, the trustee’s compensation, as well as agents hired by the trustee.
In short, the trustee’s role is to act impartially on behalf of the beneficiaries and to provide them with full disclosure of any actions taken. This requires maintaining thorough records and translating that information into a clear accounting so that beneficiaries are fully aware of what the trustee has done.
It is important to note that a trust accounting is unlike a tax or financial accounting typically prepared by accountants who may be unfamiliar with the strict requirements of the California Probate Code. The best way for a trustee to avoid mistakes that could potentially result in litigation is to consult a highly capable trust administration attorney who can assist with creating a balanced trust accounting.
At Loew Law Group, we routinely work with trustees to ensure that all assets are properly titled, appropriate records and receipts are retained, and that all beneficiaries receive proper trust accountings.
Contact Our San Mateo Trust Administration Attorneys
If you have been named as a fiduciary or beneficiary of a trust, the best decision you can make to protect your rights is to consult the trust administration attorneys at Loew Law Group, PLC. Our legal team provides guidance to trustees so that they avoid costly mistakes that could expose them to legal liabilities and significant financial penalties. We also represent beneficiaries to ensure they receive any assets they are legally entitled to under the terms of the trust. When necessary, we also work to protect our clients from creditor claims and represent them in trust-related disputes whether through litigation, mediation, or arbitration. Above all, we are committed to helping our clients preserve and protect their wealth. Please contact our office today to set up a consultation.