So you have been named a Successor Trustee of a trust, what now?
It can be quite a scary task to assume the role of a successor trustee especially if you don’t have any idea as to how it is done. No amount of trustworthiness and credibility can prepare yourself to what’s coming in administering a trust. Thus, it is always best to be prepared and ready to act as one.
The following steps will help you to better strategize your responsibility and effectively take on the role of a trustee:
Check pertinent trust documents
The first thing that you need to do is to secure all the relative trust documents. These may include the Trust Agreement, Power of Attorney, Pour-Over Will and the like. Once you have secured the trust documents, take time to read and understand all the terms and conditions stipulated.
By then, you should be able to identify the beneficiaries of the trust, how the asset is to be distributed, and other basic personal and financial information of the grantor.
File several Notices for compliance
Under California’s Probate Code, the trustee should sign an Acceptance of Trusteeship and should subsequently sign a Certificate of Trust. He may also file a Notice to Beneficiaries and Heirs within 60 days after becoming a trustee. If the trust assets include real estate properties subject to taxation in California, the trustee must also file a written notice to the Assessor’s Office within 150 days of the grantor’s death.
Taking Inventory and Custody of the Trust Assets
The first step in taking inventory and custody is to search for the trust assets. As a trustee, it is your duty to locate them in order to gain possession of such assets. Once they have been located, the next step is to gain legal documents signifying grantor’s proof of ownership of such assets.
This step also involves changing of the trustee on the grantor’s existing accounts from his name to the trustee’s name as it is the trustee who will now have the authority to manage such accounts. Social security benefits and insurance claims must also be filed in this stage.
Determine the decedent’s liabilities
These liabilities include the decedent’s hospital and funeral expenses to other debts owed to various external creditors. The trustee must exert diligent efforts in determining the existence of decedent’s other debts.
Administering the estate of the trust
This step includes the collection of all receivables, dues, and income owed to the decedent or his estate. It is also the duty of the trustee to protect, preserve, and make reasonable investment on the assets of the trust estate. This may include insuring the property and keeping a detailed bookkeeping of all income, expenses, and other transactions related to the estate.
Filing tax returns and payment of tax dues
The trustee should file the following forms and necessarily pay the taxes thereto:
- Decedent’s Form 1040
- Trust Income Tax Return Form 1041
- Estate Tax Return Form 706
Distribution of the Estate
This is the ultimate and final step in a trust administration. After paying all the creditors and tax liabilities, the distribution of the net estate to the beneficiaries may begin. Of course, it is important to adhere to the provisions of the trust. After all, it is also the duty of the trustee to distribute the estate according to the grantor’s wishes.