A successor trustee plays a critical role in the estate planning process by carrying out the wishes of the deceased. As the one named in the trust, they assume control of the estate after the trustee dies or becomes incapacitated, and are entrusted to manage the assets, pay outstanding debts, and transfer the assets to the designated beneficiaries.
If you have assumed the role of successor trustee, it's important to contact an Orange County estate planning attorney to determine what your next steps should be.
Let's examine the responsibilities of a successor trustee and when you need the services of a trust attorney.
If you have been named the successor trustee for someone's trust, you may be wondering just what your duties are and whether you are up to the task. Both of those questions are important considerations, as the responsibilities associated with this role are many.
When the grantor (the person or couple who set up the trust) becomes incapacitated or dies, you, as the successor trustee, take over as the manager of the trust. This means that you are responsible for the assets, which may include investing them in a way that maximizes growth while minimizing risks.
In that case, you'll need to evaluate the assets held within the trust, as well as the income and expenses. Some additional responsibilities may possibly include ensuring final tax returns are filed, collecting death benefits, and distributing the assets to the beneficiaries.
As soon as your duties begin, it is important to immediately consider consulting with an Orange County estate planning attorney.
For further clarification, the following represent typical scenarios often benefit from an attorney's assistance:
A trust is a document similar in most respects to a contract designed to hold valuables and provide instructions for their distribution. The valuables are assets of the estate. However, if the owner acquired assets after creating the trust and failed to add them to the trust, a probate judge may be required to determine rightful distribution. In this case, the
The best way to stay out of court and reduce expenses and taxes is by ensuring the trust is fully funded and that all beneficiary designations have been updated. After assuming the role of successor trustee, should you discover that some assets have not been funded to the trust, you will need an estate planning attorney in Orange County to sort out the details.
It's difficult enough to manage a simple revocable trust. Add the A/B trust into the mix makes acquiring the services of an estate planning lawyer in Orange County a necessity.
In order to help married couples, and avoid additional estate taxes, estate planning attorneys often set up A/B trusts where upon the death of the first spouse, the trust splits and part of it becomes irrevocable.
For blended families with children from different marriages, an A/B trust can protect the beneficiaries and the distribution of assets to them after the death of one of the spouses. It is quite likely that if you are a successor trustee dealing with an A/B trust, you will need the counsel of an estate planning lawyer Orange County CA.
Whether due to specific instructions or the beneficiary being too young to receive their inheritance, dealing with assets held in a trust can raise complications. A trust may mandate certain distributions, such as income, over the life of a trust or lifetime of a person.
It is a successor trustee's responsibility to implement the terms of the trust and manage the assets carefully. Understanding your role as successor trustee, and reviewing the key provisions with an estate attorney is vital.
If a successor trustee distributes assets to the beneficiaries before paying taxes, they may be held financially responsible should the trust not have the funds or assets to pay the taxes in full. If you, as a successor trustee are uncertain if taxes need to be paid, consult with an Orange County estate planning lawyer to make sure the appropriate tax returns are filed and paid.
As a successor trustee, you are responsible for all the assets placed in the trust. When a business interest is held in a trust, the successor trustee is then responsible for continuing to operate the business, shutting it down, or possibly selling it. Diversifying the trust's investments is one of the trustee's duties, which means that many opt to sell.
For families wishing to keep their company, some trusts establish an investment advisor who oversees all business interests and has authority to conduct an ongoing business. This person then becomes responsible for the retention or sale of business assets according to the trust, and the trustee must follow their instructions.
Another possible scenario is that the trust named a business person as co-trustee, one who manages the business interests along with the primary trustee.
If an advisor or co-trustee has not been named, the trustee may delegate responsibility for the business to a carefully chosen third-party. The bottom line: if a business is held in a trust and you are the successor trustee, it's time to contact an estate planning lawyer in Orange County.
There are some reasons to name a trust as an IRA beneficiary, such as when the intended beneficiary is a minor and unable to legally own the IRA, or a second marriage or blended family creates the need to protect the interests of the children of the grantor.
In this instance, the required minimum distribution can benefit the spouse and then pass over to the grantor's children upon their passing.
Even if an individual is named as the beneficiary of an IRA, an attorney's services include counseling the successor trustee on the handling of the retirement assets and the possible tax ramifications.
Unfortunately, the internet is awash with stories about families fighting over an inheritance. Money and emotionally-tied family heirlooms seem to bring out the worst in people with tension and distrust replacing thoughtful consideration.
So, what happens when the family members don't agree with how the successor trustee is handling the estate and distributing the assets? In these instances, a trustee's best option is to obtain the services of an Orange County estate planning attorney.
Because of the many legal ramifications, some grantors opt to name a trust lawyer to handle the many tasks of a successor trustee. Having a disinterested third party managing the estate assets can result in less family tension and worry.
Whether to name a trust attorney as a successor trustee, or retain the services of a trust lawyer when you find yourself in the role, we at Parker Law Offices are here to support you. Call us for a free consultation today.
Estate planning can be a complicated and overwhelming endeavor. It often involves complex issues with extended families and blended families, and often brings about conflicts of interest as family members discuss what assets go where and who should be the designated successor trustee.
As a top Orange County estate planning attorney, we at Parker Law Offices have served clients from all walks of life and understand the conflicts that can arise when determining these important considerations.
Estate planning difficulties usually arise out of differences of opinion. Fortunately, those differences can usually be settled through thoughtful planning. Let's take a look at the most common conflicts of interest and how to overcome them.
A survey conducted by TD Wealth found that the leading threat to estate planning is family conflict.
Respondents cited designating beneficiaries as the number one cause of conflict, followed by the contention that arises from blended families and lack of communication among family members.
Determining which family members receive what assets can lead the closest of families into heated debates. While money plays a major role, you would be surprised at how often the debate isn't really about money, but love. For example, Mom's wedding ring symbolizes the connectedness and security of a family, and both siblings want it.
In order to keep your children from heading to the courts to fight, it's important to have all assets, including family heirlooms or objects with emotional attachments, listed in the trust. The instructions in the trust ensure that all parties understand what your wishes are.
What happens, however, when you and your spouse disagree about who should receive what?
Your Orange County estate planning lawyer can advise you and your family on what is customary in certain situations. Discuss your options and concerns with your attorney who has prepared countless estate plans and witnessed so many that have led to peaceful resolutions and have avoided embittered battles because of properly prepared estate plans having been put into place.
Approximately 40% of married couples in the U.S. with children are defined as step-couples. This term of the 20th century refers to families in which at least one of the partners has a child from a previous relationship.
Unfortunately, this family composition is the third leading threat to estate planning. One party wants their birth son designated as the successor trustee, while the other wants his or her birth daughter designated.
Children from previous relationships, and the complex bonds from those family connections, can make this conversation particularly difficult to settle.
If one of the parties does not approve of the trustee the other party is set on, an alternative trustee needs to be discussed. The role of trustee is an important fiduciary position and should be designated for only the person who is most trustworthy.
One of the many benefits of a trust is it protects the estate from going through probate, potentially saving your family a tremendous amount of time and money. This also means that the court will most likely not be involved and will not be overseeing the actions of the trustee--or making decisions on behalf of those who may inherit from the estate.
If the successor trustee finds it tempting to take more than his or her rightful share of the estate as determined by the trust, family members can end up in court at a substantial cost in terms of both money, time, and emotions to all involved.
Communication about estate planning topics can be difficult even in the best of situations. Having a conversation involving money, assets, and death can throw many families into heated controversy.
For some families, bringing an unrelated third party to the table can reduce emotional turmoil and ease conflict. Similar to coming together with your financial advisor or a trusted family friend who does not have any stake in the outcome, meeting with your estate planning attorney can help provide a neutral, unbiased perspective.
Couples will need to decide who they will designate as the successor trustee. This is the person responsible for managing and protecting the assets as well as distributing them to the beneficiaries.
The role of successor trustee should be entrusted to the most dependable and trustworthy family member. Unfortunately, couples do not always agree on who will best represent them and take care of the many responsibilities in an appropriate manner.
To complicate matters, some families opt to have more than one person take on this role, or fail to designate a back-up trustee should the first successor become ill or find the many responsibilities overwhelming.
Discuss this important decision over with your estate planning lawyer Orange County CA. You will be able to confidently cover essential topics including provisions that allow, or do not allow, your beneficiaries to replace the trustee with someone of their choosing.
Choosing a guardian for your minor children will enable someone to care for them should something happen to both parents, might result in tremendous family tensions. There is, after all, much at stake.
If left undecided, or not legally documented, the decision rests with the court. If no family member steps forward that the judge deems a presentable parent, the children could be placed in Child Protective Services.
Some considerations include choosing a person that currently has a loving relationship with the child. For some families, this individual may be a close family member or distant relative; for others, they may be a friend.
Don't let "lack of blood relations" steer you away from the clear choice. Be sure to designate an alternative guardian in case the person you named is unavailable.
If you and your spouse disagree, it's time to seek guidance and counseling. This is far too important a decision to set aside until you can come up with a suitable agreement.
Your estate planning lawyer in Orange County can help you work through these difficult decisions and ensure your estate plan lists the appropriate preferences and instructions, as well as clarifying financial support for guardian and children.
Joint representation makes sense for many couples. For those that agree on the most important decisions, have an open and honest relationship, and solid communication skills, working together with one lawyer saves time and presents a cost-effective strategy.
For those couples that may have disagreements, individual representation may be the answer. This approach maintains the attorney-client privilege and allows each party to share concerns as well as information that they may want to remain confidential. By consulting with an estate planning attorney in Orange County, you're able to discuss your concerns and put an estate plan in place that will be a comfort to your surviving family members.