Trust Administration occurs when your loved one passes away leaving assets in a trust. If you are named within the trust document, you will have to administer the trust for the benefit of the beneficiaries. Upon the death of a loved one, this is usually the last thing people are thinking about doing. Additionally, most of our clients have no experience in administering a trust. That being said, when we do estate planning for a person or couple, we set it up in a way that the Successor Trustee can administer the entire estate without having to hire an attorney. That being said, some people still choose to hire an attorney for guidance. At SSR Law Office, we tell people that they can use us to do as much or as little of the administration as they like. If they only need help with a few things, and they want to do most of the leg work, that is fine with us!
If you are the Successor Trustee responsible for administering a trust after the death of a loved one, there are many steps you need to take to administer and settle the estate property. In most cases, successor trustees have little or no prior experience in trust administration. The following checklist is meant to help guide you through the process:
TRUST ADMINISTRATION CHECKLIST:
1. Obtain Death Certificates: Order 5 to 10 copies of the death certificate. You will need these for each asset to prove the deceased has passed away. Sometimes you do not get them back.
2. Locate Important Documents: Review and locate any estate planning documents such as the Last Will and Testament, Living Trust, etc. and mail to all beneficiaries. Also, locate any military discharge papers, if applicable.
3. Manage Trust Assets: Secure all assets and personal belongings to make sure they are not lost, stolen or destroyed.
4. Secure Real Estate: Consider changing the locks to any uninhabited real estate.
5. Forward Mail: File a request with the post office to have all mail forwarded to the appropriate person.
6. Find Statements: Gather the decedent’s most recent tax returns, asset statements, life insurance policies, deeds, and any other financial records that are available.
7. Do Inventory: Create an inventory of assets owned by the trust and their values as of the date of the decedent’s passing and mail to all beneficiaries.
8. Meet With Professionals: Meet with a Probate Attorney, CPA, and Financial Adviser for advice.
9. Determine Whether Probate Is Necessary: Determine if any assets are owned outside of the trust that will need to go through probate. If so, open the decedent’s estate with the probate court.
10. Pay Bills: Determine what monthly liabilities will need to be paid, such as mortgage, utilities, etc. and arrange to pay them.
11. Cancel Subscriptions: Notify any credit card companies, newspapers, magazines, internet/cable companies of the persons passing, if applicable.
12. Update Insurance: Make sure that all property and casualty insurance coverage continues on all real estate, automobiles, etc.
13. Notify Beneficiaries: Send required notices to the trust beneficiaries and/or heirs at law, which are required by law or the trust document.
14. Apply for Tax ID: Obtain a taxpayer identification number for the trust.
15. Do Notice to Creditors: Publish a Notice to Creditors in the local legal news to start the claims period.
16. Manage Assets: Begin to consolidate accounts and assets to be distributed.
17. Identify and Pay Debts: Pay all valid debts and expenses of the trust.
18. Do Accounting: Prepare an accounting of income and expenditures from the date of the Inventory and mail to all beneficiaries.
19. File Final Income Tax Return: File any federal and state income tax returns that are required. If required, your loved ones final income tax return needs to be filed by April 15th of the year following his or her death.
20. Distribute Assets: Once you have completed the above, you will need to distribute the trust property to the beneficiaries.
CASE STUDY #1 - ALL ASSETS IN TRUST
Great! The Trust has been funded properly and is able to be used as intended while avoiding the time and expense of having to go through probate court!
CASE STUDY #2 - ASSETS OUTSIDE OF TRUST
Unfortunately, sometimes you find that your loved one had a trust but never titled their assets into it leaving the trust unfunded. When they created the trust they may not have been counseled in a way to make them understand that they had more to do or maybe they procrastinated on moving their assets into the trust or maybe they just forgot. Regardless of the reason, a trust that is unfunded does not own any assets. The attorney that drafted the trust probably did a pour over Will to the Trust. Therefore, the assets will ultimately pour into the trust but they will have to be probated first through a Decedent’s Estate. Once the Decedent’s Estate is open with the probate court, the assets will be transferred into the Trust and the Trust Administration process can begin.
FREQUENTLY ASKED QUESTIONS:
How long does the Trust Administration Process Take? The average time to administer a trust is 6 months. However, factors such as: selling or liquidating assets, completing a tax return, beneficiary contests, etc. can affect this time frame.
What is Probate? Probate is the court process of administering someone’s estate when they pass away with assets in their name alone. A Probate Estate is not always necessary and can be avoided for assets that: (1) are jointly owned; (2) have a beneficiary; or (3) are owned by a Trust.
How much will the Estate pay in taxes? The estate and gift tax exemption for 2019 is $11.4 million, per individual. Meaning, an individual can leave $11.4 million to their heirs and pay no federal estate or gift tax, while a married couple can leave a combined total of $22.8 million.
HOW CAN WE HELP?
At SSR Law Offices, we understand that losing a loved one can be extremely difficult. In addition, you suddenly have the responsibility of administering their estate. For many people, this is their first experience with estate administration and they find themselves wondering where to begin. The attorneys at SSR Law Offices can help by:
- Making sure you have done what the Successor Trustee is required to do under the terms of the Trust and Michigan Law.
- Filing a Creditors Notice on your behalf to cut your liability period for unpaid bills down to 4 months. Bills received after this period do not have to be paid;
- Sending a copy of the Trust to the beneficiaries and keeping them apprised of the process and what to expect;
- Acting as a mediator between Interested Parties when distributing personal property and other assets of the estate;
- Preparing Deeds to transfer real property from the Trust to the appropriate person(s);
- Ensuring that the Trust is administered as quickly as possible; and
- Taking the stress of the process off the Successor Trustee.
It is important that the trust administration process is done properly. The attorneys at SSR Law Office are experienced in guiding their clients through the process making it easier, while saving them time and money. Call our office today at 586-239-0871 for your strategy session!