When a loved one passes away and has a trust in place, trust administration becomes a necessary process. Unfortunately, many lawyers often oversimplify the administration, failing to fully explain the responsibilities that come after the client’s death. This lack of clarity can be risky, especially when the designated Trustee is unaware of what needs to be done. At Garrity Traina, we value open communication and offer our clients the opportunity to have a “family meeting.” In this meeting, we discuss all the important details of the trust with the chosen Trustees, ensuring that everyone understands their role and responsibilities when the time comes.
Understanding the Role of a Successor Trustee
Clients often ask about the duties of a Successor Trustee. While there isn’t a fixed set of tasks applicable to every trustee, there are some common responsibilities to be aware of. Keep in mind that the specifics may vary depending on the estate’s unique circumstances, such as the types of assets involved, the ages of the beneficiaries, and the Grantors’ instructions within the trust itself.
That being said, here are some typical tasks that most Successor Trustees are likely to handle:
- Notifying beneficiaries and heirs: The first step is informing all relevant parties about the Grantor’s passing.
- Obtaining an IRS Tax ID Number: A Tax ID Number for the trust is necessary, and the Successor Trustee is responsible for obtaining it.
- Filing tax returns: This includes filing the final income tax return for the deceased and, if applicable, a death tax return. Additionally, annual trust income tax returns must be filed as long as the trust remains open.
- Publishing a legal notice: A notice regarding the Grantor’s death must be published in a local newspaper.
- Marshalling and protecting trust assets: Bringing all the assets together and ensuring their protection is a crucial responsibility.
- Opening a trust bank account: A dedicated bank account needs to be established for the trust’s use.
- Settling financial obligations: The Successor Trustee is responsible for disbursing the decedent’s financial and last expenses.
- Managing life insurance policies: Collecting the proceeds from life insurance policies is an important task.
- Probate considerations: Assessing whether a formal probate needs to be initiated for any assets not titled within the trust.
- Notifying financial institutions: Informing all relevant banks and financial institutions about the Grantor’s death and the appointment of the Successor Trustee.
- Notifying government agencies: As applicable, relevant entities such as the V.A. and Department of Health Services need to be notified.
- Determining beneficiary status: Identifying the beneficiaries of the decedent’s retirement accounts and ensuring they receive the proper benefits.
- Obtaining property valuations: It is essential to determine the value of all assets as of the date of the decedent’s passing, including real estate and business interests.
- Estate tax consideration: Evaluating whether federal or state estate taxes need to be paid.
- Settling debts: Clearing the Grantor’s debts using the assets from the trust.
- Covering administration expenses: Managing ongoing expenses related to trust administration, such as legal and CPA fees.
- Liquidating assets if necessary: Liquidating assets to settle the Grantor’s debts, if required.
- Prudent asset management: Safely and responsibly investing the trust’s assets during the administration period.
- Distributing trust assets: Finally, after completing all the above tasks, the Successor Trustee can distribute the trust’s assets to the beneficiaries.
You’re Not Alone: Seeking Professional Guidance
Navigating trust administration can be overwhelming, but you don’t have to face it alone. At Garrity Traina, our experienced estate planning attorneys and CPAs are here to help. We offer trust administration services, ensuring you have the guidance and support you need throughout the process. Visit our website Garrity Traina to learn more and take the first step toward a smooth transition for your loved one’s trust.
