Trust Administration

The average person has had little experience dealing with trust and often has many questions on becoming a trustee for the first time.

Through our experience in helping people administer trusts, we have found that many individuals have unreasonable expectations concerning the way revocable trust operate following a death.  It is true that a revocable trust in many cases drastically reduces the costs and delays involved in passing on assets at death.  A revocable trust accomplishes this feat by avoiding probate.

However, even without a probate, many administrative chores have to be completed, e.g., legal documents prepared, tax returns filed, and other matters addressed that take time and cost money.

What’s important?

The trustee will require a trusted attorney to help administer the trust. By hiring our firm, you will remove the stress, confusion and mitigate mistakes commonly made by those that do not hire an attorney.

What is the process for a successor trustee following the detail of the trustor under a revocable living trust?

1.    It is very important that you read and understand the terms of the trust and contact any named co-trustees.

2.    You will need to give written notice of the living trust to trust beneficiaries, the descent’s heirs at law and contingent heirs.

3.    Organize a preliminary inventory of the trust assets with estimated values.

4.    Organize meetings with legal, financial, real estate or tax professionals. You will need to get an accurate valuation on the assets, making sure that all assets are properly titled in the trust.

5.    Organize and collet death benefits, prepare and file tax returns, pay bills and prepare a final accounting statement.

6.    And finally, distribute trust assets according to the terms of the trust

Special Circumstances

There is also a popular misconception that the existence of a revocable trust avoids all possibility of court involvement.  This is true (in part) only if all of the Settlor’s assets were properly funded into the revocable trust.  For example, if assets held outside the trust exceed $150,000 in gross value, a probate will be required for those assets in order for you, as Trustee, to collect those assets and add them to the trust.

Moreover, if at any time a beneficiary of the Trust believes that the Trustee has acted improperly or without regard for the beneficiary’s interests, the beneficiary may file a petition with the court to force the Trustee to make a full report and account or to redress an alleged breach of trust, including removal of the Trustee or surcharge against the Trustee.

Finally, circumstances may arise in which there are questions about whether the Trustee should or should not take certain actions (e.g., selling a business interest or real property, commencing litigation).  In such cases, it may be advisable for the Trustee to petition the court for instructions whether to proceed in a certain way.  The beneficiaries will be given notice of the hearing and will be given a copy of the petition that describes the proposed action.  The matter will then be addressed in open court, and the beneficiaries will have an opportunity to appear in court and be heard.  By obtaining an order from the court in this manner, the Trustee may be able to cut off the beneficiary’s right to complain about the particular action if her or she fails to appear in court.  Such a petition provides protection for the Trustee if there is a fear that the Trustee’s decision will be second-guessed by a beneficiary.  Also, if relations between the Trustee and the beneficiaries are hostile, it may be advisable for the Trustee to seek court approval of the Trustee’s accounts to minimize potential arguments with the beneficiaries.

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