Trust Administration: The Basics

Trust administration is the process used to ensure that a trustee complies with California law and is carrying out the mandates of the trust as written. For example, a common task in trust administration is ensuring that the title to assets held in the trust is properly transferred. Trust administration also includes the process by which a trust creator’s (also known as the “trustor” or “settlor”) estate is distributed following his or her death. Following the creator’s death, the successor trustee(s) takes over management of the trust. The trustee must take multiple steps to properly administer the trust assets.

After the death of the trustor, the trustee of any trust has a number of fiduciary duties with regard to the trust and its assets. Here are some important examples:

• Locate the deceased’s important documents, including the will, trusts, tax papers, and funeral directives.
• If deceased was living alone, change locks and secure the house.
• Check on insurance for the property and any cars the deceased owned to be certain the assets within the trust are protected.
• Arrange to have certified copies of the deceased’s death certificate from the city or county where the death occurred.
• Take an inventory of all assets and the value of those assets, because the value will affect the new tax basis of the items going forward. The value of all these items at death may need to be considered when evaluating federal state tax liability (if any).
• Make a list of any household items that will be distributed to beneficiaries, and consider photographing the items to help with organization.
• Take an inventory of bank accounts and the like. It may help to streamline the accounts and consolidate them into one place so that it is easier to keep a record of all trust activity, including bills paid and deposits made.
• As trustee, you are responsible for paying any remaining debts or bills. If these are not paid you, and not the estate, may be personally liable.
• You may need to obtain a Tax ID number for the trust if the trust will generate more than a few hundred dollars between the date of decedent’s death and when all of the assets are distributed. This step can be complicated and you may want to refer to an attorney or a tax professional for advice.
• Make sure that all tax returns are filed in a timely fashion.
• File any claims for life insurance, IRA’s or other assets that require claims. Also be sure to liquidate any assets that need liquidating, but get advice before you act because there may be serious tax consequences.
• Accounting is required of trustees by law. Keep a record of all assets in existence at death and show all additions to the trust, subtract all expenses, and be prepared to show current assets within the trust. Place the assets into a non-interest bearing account to make sure the value does not change after the final accounting is complete.
• Distribute the trust assets. Have a lawyer or other professional create a receipt and release form for each beneficiary, memorializing that each person received their inheritance and that the trustee is released from further liability.

While trust administration is generally handled outside the court system, breach of any of the trustee’s fiduciary duties can result in a court action being brought by a beneficiary. For this reason, it is important that a trustee seek out the help of a qualified trust attorney for guidance as needed.

The attorneys at Lonich Patton Erlich Policastri  are experienced in the area of trust administration and can advise the trustee regarding their duties and responsibilities while guiding them through the trust administration process. In addition, our attorneys have experience assisting beneficiaries who believe the trustee is not acting properly. We invite you to contact our office to schedule a free consultation, with no obligation, to discuss your trust administration needs.

Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.