The Legal Process for a Successor Trustee

The Legal Process for a Successor Trustee

Are you a successor trustee? What occurs when the settlor, or developer, of the trust dies? This process is called Trust Administration. Typically, when customers enter my office, they assume that developing a trust will get all the “work” required after their death. They could not be more wrong. Yes, having a trust is much to your advantage. Nevertheless, whomever you select as your follower trustee needs to be prepared to obtain working after your death.

There are 6 unique steps in this procedure: (1) Alert; (2) Handling real property; (3) Gathering other assets; (4) Paying debts and taxes; (5) Accounting; (6) Circulation. Each action can be very involved and requires excellent record keeping. So, in selecting a follower trustee, remember that the person should be able to deal with a good deal of paperwork and monetary responsibilities.

Step 1: Notification

California Probate Code Area 16061.7 has several notice requirements. The successor trustee need to inform all beneficiaries and successors of the death of a settlor (or creator of the trust). The notice section is really particular and has various notice requirements for various scenarios. It is crucial that a successor trustee knows this requirement, as many do not realize their duty to act. If you are in Southern California and require the services of a professional Palm Springs probate lawyer, contact one sooner rather than later.

Step 2: Handling Real Property

Next, the successor trustee need to deal with the real estate owned by the settlor. If the trust was effectively “moneyed”, then the real estate must currently be entitled in the name of the settlor as trustee. So, at the settlor’s death, the successor trustee needs to tape-record an Affidavit of Death of Trustee and Permission of Successor Trustee, together with a certified copy of the death certificate, against each real estate kept in the Living Trust. When it is recorded, it alters the title of the residential or commercial property from the settlor who has died and into the names of the brand-new trustee( s).

If the trust was not effectively moneyed, there might be an issue. However, not all hope is lost. There is an option for a Heggstad Petition (Petition under California Probate Code ยง 850). This is not ideal, but it is a choice.

In addition to the above, there will be a few other forms need by the recorder’s workplace.

Step 3: Collecting Other Possessions

Once the real property is handled, the next action is collecting all other assets (i.e.: savings

account, financial investment accounts) and have the title to those properties moved into the successor trustee’s name. Getting a Federal Tax Identification Number is needed to complete this action. The successor trustee should NOT use his/her own Social Security Number.

Step 4: Paying Financial obligations and Taxes

After establishing all possessions, the successor trustee then identifies taxes and debts. To determine whether a federal estate tax return (Kind 760) must be declared the departed

inhabitant, you will have to accumulate the overall value of the decedent’s estate, including both trust assets and non-trust properties. If the total worth of the estate is more than the exemption quantity, then the successor trustee has nine months in which to submit the Type 760. The basic exclusion amount for decedents passing away after December 31, 2014 is $5,430,000.00.

Even if the estate does not own estate and gift taxes, the successor trustee will be responsible for filing a last earnings tax file for the decedent.

Please understand that a trustee can be held personally accountable for unpaid taxes.

Step 5: Accounting

The successor trustee need to keep a detailed report of the trust assets, all loan invested in winding up the decedent’s estate, all deposits into the trust and all dispensations from the trust. Some trust files will waive this requirement; however, it is still a finest practice to keep a record, to protect against any liability.

Step 6: Distribution

The last step is the distribution. This is a very important step in the procedure also. The trust agreement will information out how property is to be distributed. Nevertheless, there might be some cautions to outright circulation. There could be creation of sub-trusts or on-going trusts. It would be finest practice to obtain a court approval on a distribution if the trustee is at all worried about liability.

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