Trust Administration Attorney in Rocklin, California

If a person dies with a will, or even without one, that person’s estate must go through probate court proceedings before beneficiaries can get their share per the will’s instructions. If there’s no will, the court will decide who gets what. Probate proceedings can be lengthy and costly even without challenges.

One way to avoid probate is by setting up a living trust to which you assign all your assets. While you’re alive, you are the trustee who manages the assets on your own, just as you would in everyday life. However, when you pass away, the trust and its assets will be turned over to the successor trustee you’ve named in your document. No court will supervise the trustee in carrying out his or her duties.

You may be considering setting up a trust for yourself and your family or you may have just lost a loved one whose assets were in a living trust. Either way, you likely have questions and concerns about what happens during the trust administration, the period following the original trustee’s death when assets will be distributed according to the terms of the trust.

If you’re in or around Rocklin, California, or nearby in Roseville, Folsom, or Citrus Heights, contact the Law Office of Geoffrey Fong. Estate planning attorney Geoffrey Fong has helped countless clients similar to you and will be happy to answer your questions and explain the trust administration process to you. He can also create a living trust for you or review and update an already existing trust.

Overview of Living Trusts

A living trust is similar to a last will and testament. Both documents are used to name beneficiaries and assign assets to them. In a will, you name a personal representative to carry out your instructions and divide assets according to your wishes. In a trust, you name a successor trustee who will oversee the fulfillment of your desires for your beneficiaries.

The big difference is that a personal representative, who becomes the executor of your will, will be supervised by a probate court, which can slow down proceedings and sometimes incur legal costs if there are challenges to the will or creditor demands occur.

A living trust is administered outside of the probate court, but the court will be notified of the original trustee’s death. Taking place outside of court has the added advantage of meaning the proceedings will be private, not public. There will be no arguments back and forth inside a courtroom and no public records.

Role of the Successor Trustee

The successor trustee who takes over administrative duties once the original trustee passes away faces many challenges, but through it all, they have a fiduciary duty to carry out the wishes of the grantor of the trust. If the trust instructs that assets be invested in a certain way, the trustee is expected to follow those instructions, as well as to distribute assets to beneficiaries as specified.

One of the first duties of the trustee is to send a notice to the beneficiaries named in the trust and to any heirs of the decedent’s estate. This gives them notice that the trustee is taking over the estate, provides contact information, and informs the recipients of their right to review the trust document. They have 120 days to respond.

The next step is what state trust administration guidance calls “marshalling California trust assets.” This means surveying and collecting all assets. The trustee will need to open up a bank account to deposit any cash from the estate.

The trust assets must then be appraised. For cash and securities, this is a fairly simple task, but if there are jewelry, real property, or collectibles involved, those likely will have to be appraised professionally. This is especially important if the trust assigns distribution to beneficiaries by percentage (50 percent for one beneficiary, 20 percent for another, and so on).

The trustee is also responsible for paying all creditors and taxes owed and collecting any debts outstanding, like payments from a rental property.

Once all debts and taxes have been paid, the trustee can proceed with the final step, which is to distribute assets to named beneficiaries. The trustee is also entitled to reimbursement for any expenses as well as an administrative fee for overseeing the trust process. The trust may have set the fee in advance. Otherwise, it will have to be worked out between the trustee and beneficiaries.

Common Trust Administration Issues

Creditors can pose one challenge to the administration of a trust. Disputes over the terms of the trust by heirs and beneficiaries can be another. The assets themselves may also pose a challenge. If there are valuable collectibles or jewelry in the estate, they may have to be guarded to prevent theft or damage. Real property may have to be maintained and repaired, mortgages and taxes paid.

Another possibility is that the decedent neglected to transfer some assets to the trust. If so, those assets will have to go through probate before being assigned to the trust. This is true even if the decedent established what is called a “pour-over will,” which assigns any assets not included in the trust to the trust upon death. These wills must also be probated.