Trust Administration Checklist

While every trust administration is different there are some similar elements to each one. Let’s go over the basics.

Trust administration is the process of settling a trust due to some change that makes the trust irrevocable and sets a time table for distribution according to the California Probate Code and Texas Estates Code. The most common way that trust administration comes about is on the death of the second settlor, i.e. creator of the trust. At this point the trust becomes irrevocable and the successor trustee named in the trust would take over and complete the trust administration.

This a short list and does not include everything that needs to be done. Every situation is different and if you are a trustee it is a good idea to speak with an attorney to make sure that you have done everything required of you by the California Probate Code to avoid possible litigation.

The first step is to find the trust and know your duties.

You may already have a copy in an ideal world. You may have to do a little searching. If you know the attorney’s name that created their trust call their office. They probably have a copy. If you still cannot find the trust then it is time to call an attorney to figure out your options.

Know your duties. As successor trustee you are held to very high fiduciary standards. All of your duties are listed in the Probate Code Section 16000-16081, and include some of the following:

  • Duty to administer trust
  • Duty of loyalty
  • Duty to deal impartially with beneficiaries
  • Duty to avoid conflict of interest
  • Duty not to require beneficiary to relieve trustee of liability
  • Duty not to undertake adverse trust
  • Duty to take control of and preserve trust property
  • Duty to make trust property productive
  • Duty to keep trust property separate and identified
  • Duty to enforce claims
  • Duty to defend actions
  • Duty to use special skills
  • Duty to provide information to beneficiaries
  • Discretionary powers to be used reasonably

The second step is to give notice.

Once you have identified all the beneficiaries by reviewing the trust then you must prepare a Probate Code Section 16061.7 – Notification by Trustee – to all beneficiaries within 60 days of decedent’s death. However, there are special circumstances for unknown beneficiaries, etc. Disinherited heirs are entitled to notice as well.

The third step is to determine creditors of the Estate.

Were there any credit cards or known creditors to the Estate? Collect the bills of the decedent and determine who they owe money to around town. If you believe it is a legitimate claim then pay it. For unknown creditors it is a good idea to publish notice in the paper.

Additionally, no one dies on the IRS time table so there maybe Federal and State taxes due as well. Go see a Certified Public Accountant.

The forth step is to collect assets and determine what assets there are in the Estate.

What cash and non cash assets were there in the Estate? Most of the time you will know what bank the decedent used, etc. but if you do not a good starting place is to look is on the “Trust Asset Schedule,” which lists the assets. This is usually found in the back of the trust document or in the trust binder. If the Asset Schedule was kept us to date then this will be your road map to collecting and distributing assets.

If there was real property in the trust then you will need to pull the most recent deeds and draft deeds to transfer the title to you as successor trustee. If it was held in the name of the trust then you will do what is called a Affidavit – Death of Trustee Deed as well as a Preliminary Change of Ownership Report. Also, if you were related to the decedent you could qualify for the Parent/Child Exclusion under Proposition 13.

The fifth step is to distribute the property and give an accounting.

It is understandable that a trust administration could take longer than a year. Some do and the size of an Estate is a factor in the collection and distribution of  assets. Maybe the property is not selling. Maybe you had to fix it up in order to sell it. However, you do need to make some distribution in the first year and have a good reason why the entire Estate cannot be distributed. You cannot condition the payment of beneficiaries upon the signing of a distribution receipt. Give them their money, if the distributions are outright, or give them a good reason why they cannot have it like, the house has not sold yet, etc.

Additionally, depending on what the trust states, an accounting is required by the successor trustee within the first year and annually, but you can have the beneficiaries waive a formal accounting if you would like with the proper forms.

There are many turns the trust administration can take so this list is just the basics but should give you an idea of the job at hand.

Coastal Pacific Law attorneys are experienced in estate and business planning, and can help with your trust administration, probate administration or estate plan. To schedule a complimentary consultation, call (619)786-6563, or fill out a Contact Request Form.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Photo by Riccardo Annandale

Posted from San Diego, California, United States.