Supporting The Management Of Trusts
Trust administration refers to the trustee’s management of trust property pursuant to the terms specified in the trust for the benefit of the beneficiaries. There are many steps required to ensure proper administration. An experienced trust administration attorney can guide the trustees through this process.
At The Law Office of Jamay Lee, A Professional Corporation, our San Mateo-based team provides trustees with the guidance and legal insight they need to uphold their duties and protect themselves from potential conflict. We have extensive experience assisting clients with their trust law concerns, and we will support your trust administration efforts with that experience.
What Are The Duties Of A Trustee?
Trust administration in California begins with a mandatory notice to all beneficiaries and the settlors’ heirs. After receiving notice, the beneficiary has a certain amount of days, depending upon various circumstances, to file a trust contest. If no contest is filed within this time period, the beneficiary may forfeit his or her ability to do so at a later time.
If the trust holds real property, it is necessary to bestow title in the successor trustee to ensure that the trustee has the authority to manage and distribute this asset. An affidavit must be recorded against each real property held in the trust. This process transfers title on the property from the deceased settlor to the new trustees. A change of ownership form is recorded simultaneously with the affidavit. If the trust transfers real property from parents or children by any means exempt from property tax reassessment, the trustee must complete the proper exemption form.
In addition to marshaling the real property in trust, the trustee will need to ascertain all other trust assets, such as bank and investment accounts, and transfer the title of those assets into the trustee’s name as the successor trustee. In a situation where the settlor has died, the trustee must first obtain a federal tax identification number for the trust so that any income earned from the accounts in the name of the trust is correctly reported to the IRS.
The successor trustee is required to pay the settlor’s debts and satisfy his or her liabilities. Taxes can be particularly complicated because both estate and income taxes may be owed if the estate is sufficiently large. To assess whether it is necessary to file a federal estate tax return for the settlor, the trustee needs to calculate the value of the decedent’s estate. If the value exceeds the exemption amount, the trustee must file the federal estate tax return form.
Reporting To Beneficiaries
Under California law, the trustee must account to the beneficiaries at least annually, or more frequently if called for in the trust document. In accounting, the trustee must account for all income, expenses, distributions, gains and losses on sale of trust assets, and disbursements from the trust during the administration. The trustee must keep and maintain comprehensive records as any doubt or failure to keep sufficient records could potentially result in liability to the trustees.
Once the assets have been collected, the debts paid, the tax returns filed, and the liabilities fulfilled, the trustee should distribute the remaining trust assets. The terms of the trust document will order how the trust assets should be dispersed among the beneficiaries.