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Horizon Elder Law & Estate Planning Blog

Sunday, January 23, 2022

Administering a Living Trust After Someone Dies

If your loved one died and named you as the Successor Trustee of a living trust, you will have a great deal of work to do while dealing with your grief and loss. The good news is that because your loved one left a living trust, usually you will not have to go to probate court. The downside is that, even though there are far fewer steps to go through than with a will or a situation of intestacy, serving as the trustee of an estate can take a year or more.

You do not have to go through all of this process alone. A California estate planning attorney can work with you and do much of the heavy lifting on your behalf.

Locate the Paperwork

The paperwork will serve as your roadmap for the journey you were about to take. You will need to find the estate planning documents, like the living trust and a pour-over will. A pour-over will address the issue of assets that did not get titled in the name of the living trust. Without a pour-over will, you would need to go to probate court to address the assets that were outside of the trust.

Create an Inventory

It is common practice in many families to go to the house of the deceased after the funeral or within a few days of that date and divide the personal property among the heirs. Although the practice happens often, it is illegal. No one should take anything belonging to the decedent, even if that person was your parent, without going through the proper steps.

As the trustee, you will need to make a thorough inventory of everything your loved one owned, with a valuation as of the date of death. Bank accounts, investments, retirement accounts, and real estate are some of the big-ticket items. Do not, however, overlook things like vehicles, personal property, intellectual property, and other assets.

You also need to create a list of all bills and debts of the decedent. Sometimes bills do not show up for months after a person dies. Medical bills, in particular, tend to take a long time to arrive. You do not want to distribute assets and then be left without the money to pay these bills when they come.

Make Sure That You Understand What You Have to Do as Trustee

Let’s say that your last surviving parent left a simple living trust that distributes things equally between you and your only sibling. Still, you should read every provision of the living trust with exquisite care, making a list as you go through the document. Most likely, your parent made a few specific requests to close friends or charitable organizations. Also, there might be special instructions about particular individuals or items.

Pay the Debts

You might want to contact certain companies that might have outstanding bills against the estate but have not yet sent them. When you go through your loved one’s bill-paying account, you can get an idea of the usual monthly debts, like the utilities. You will want to contact the doctors, hospital, and funeral home to get the final bills.

Prepare and File the Taxes

Your loved one will have an obligation to pay state and federal income taxes for the last tax year of life. The trustee has this responsibility. Also, the estate will owe state and federal taxes on all income earned after the decedent’s death until the assets get distributed.

Handling Assets “Outside” of the Trust

Some assets do not go through a trust because they already have designated beneficiaries. Life insurance policies and retirement accounts are two common examples of assets intended to pass outside of a trust, depending on how the decedent designated the beneficiary. The pour-over will can take care of items unintentionally out of the trust.

Make Distributions to the Beneficiaries

Only after all these steps get completed can the trustee distribute assets to the beneficiaries. The distribution must be according to the terms of the trust document.

A California estate planning attorney can handle the administration of your loved one’s living trust so that you can focus on your well-being and your family. Contact our office today for a free consultation.


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