When a loved one dies, and they have a trust, there will need to be some kind of trust administration. Working with a trust attorney in Orange County, CA, can reduce all of the stress involved in administering the trust.
The amount of time required to administer a trust can vary, and there are plenty of common situations that make the task much more complicated. Professional help from a trust administration attorney can be the difference between a smooth, legal process and one full of expensive problems and headaches.
Many people believe that they can set up a trust and then forget about it. However, trusts need to be periodically updated to ensure your assets will be distributed correctly. In most cases, an Orange County trust attorney and a CPA are required to make sure the trust is administered appropriately.
Trust administration is the act of carrying out the wishes of the deceased, as written in the trust. The trust contains instructions for the trustee to follow when distributing the assets to the beneficiaries. The person who creates the trust can appoint a trustee to administer the trust. This trustee has a fiduciary obligation to protect the assets in the trust and the interests of the beneficiaries.
While some people default to making a family member or friend the trustee in charge of the administration of their trust, you can also hire a trust lawyer to handle the task. Having a disinterested party managing your assets can help avoid conflict and ensure prudent decisions are made through the administration process.
In Orange County, trust administration must follow state laws. California has some strict policies regarding how trusts are created, maintained, and distributed. Making sure everything is handled correctly is paramount.
Trust administration can be rather complicated depending on the nature of the situation, but there is a general formula that your Orange County trust attorney will follow.
The trustee in charge of managing the trust must give notice of the trust administration to all legal heirs and beneficiaries. Your trust attorney will use a specialized form to physically mail the notice to the required parties, including creditors. Anyone wishing to contest the trust has only 120 days to make their objections known.
If anything happens to the assets within the trust, the trustee can be held personally liable. With that in mind, it’s wise to identify trust assets as soon as possible and to secure them from being lost, stolen, broken, etc.
During the time it takes to administer the trust, the trustee should invest the trust’s assets in a reasonable manner. Ultimately, they should minimize the risk while earning some kind of return. This is much easier to do with liquid assets. Real estate property in the trust should be rented or sold.
The trustee needs to obtain any titles that are in the name of the trust. They also need to obtain titles that aren’t officially named to the trust but are part of the trust.
Trust assets need to be appraised as soon as possible to know their true value. Doing the appraisal correctly and timely can impact future income taxes due to cost basis adjustments. Ultimately, that means potentially paying lower taxes due to the elimination of unrealized capital gains.
The trustee will need to pay off any outstanding debts to the trust. Failure to pay creditors can result in personal liability.
The trustee is in charge of filing a number of tax returns: personal returns of the deceased, trust taxes, and taxes due from probate, etc.
The California Probate Code dictates the format that trust accounting must use. The trustee is in charge of making sure all trust accounting follows the appropriate format. The trust will have its own tax identification number.
There are almost countless ways in which trusts can be distributed. The trust documents and state law will be the defining factors in your plan. The trustee needs to create a distribution plan that follows the terms of the trust while minimizing expenses.
The trustee must take all necessary steps to transfer titles, deeds, accounts, and more.
The most significant difference between trust administration and probate is that administering a trust is not a court-supervised process. The trustee still has legal obligations and can be held personally liable for errors, but the process has a certain amount of flexibility.
Trust administration is most often faster and less expensive than probate. Another benefit is that administering a trust keeps information private. Probate decisions are documented in the public record.
The biggest downside of not having the court manage the process is that it can be more challenging to solve disputes between heirs and beneficiaries. There is also more time provided for creditors to make claims against the trust, often up to a year after the trust creator’s death.
Just like your financial legacy and assets are unique to you, trust administrations take on all kinds of shapes and sizes. Even trusts with similar assets might have completely different processes. That means that no simple guide adequately prepares you for what could happen during the administration of a trust. From disputes to legal challenges, taking on the full responsibility of handling a trust is not for the faint of heart.
Luckily, trustees do not have to be alone in their duties. With all of the complexities involved, it’s wise to hire a trust lawyer in Orange County. Your attorney can help keep the process stress-free while also reducing the trustee’s risk of personal liability.
If you’ve experienced a death in the family and need help administering their trust, don’t take the risk of going it alone. Set up a consultation with an Orange County trust administration attorney and see how they can help you in your time of need.
