With revocable trusts becoming a popular estate planning option for so called “middle class” and “middle income” families, more and more people are finding themselves having to fill the role of trustee upon the death of a loved one or close friend. Typically, revocable living trusts are set up so that the settlor(s) (the person(s) who created the trust) is also the initial trustee(s) (the individual(s) who manages the trust). A well drafted trust will also name a successor trustee who will serve to manage the trust and distribute assets upon the death of the last settlor/trustee. Quite often the successor trustee is an individual who is thrown into being a trustee without really understanding what is required of them. Though the new trustee may be feeling pressure from beneficiaries to distribute trust assets immediately, the trustee should resist doing so. There are many things a trustee must do. More importantly, being a trustee comes with quite a bit of responsibility and liability if trust assets are distributed too early or legal requirements are not followed. Because of this, it is advised that anyone faced with being a successor trustee of a trust seek the advice of an estate planning attorney regarding their responsibilities and potential liability. However, here are just a few of some of the initial steps a successor trustee must take immediately upon becoming a successor trustee of a trust upon the death of the settlor:
With revocable trusts becoming a popular estate planning option for so called “middle class” and “middle income” families, more and more people are finding themselves having to fill the role of trustee upon the death of a loved one or close friend. Typically, revocable living trusts are set up so that the settlor(s) (the person(s) who created the trust) is also the initial trustee(s) (the individual(s) who manages the trust). A well drafted trust will also name a successor trustee who will serve to manage the trust and distribute assets upon the death of the last settlor/trustee. Quite often the successor trustee is an individual who is thrown into being a trustee without really understanding what is required of them. Though the new trustee may be feeling pressure from beneficiaries to distribute trust assets immediately, the trustee should resist doing so. There are many things a trustee must do. More importantly, being a trustee comes with quite a bit of responsibility and liability if trust assets are distributed too early or legal requirements are not followed. Because of this, it is advised that anyone faced with being a successor trustee of a trust seek the advice of an estate planning attorney regarding their responsibilities and potential liability. However, here are just a few of some of the initial steps a successor trustee must take immediately upon becoming a successor trustee of a trust upon the death of the settlor:
1. Lodge any will with the proper California Superior Court within 30 days from the date of death of the settlor. Although the settlor has a trust, he or she probably also had a will. It most cases, it would be a pour-over will which is a will that is usually made at the same time as the trust and provides that, among other things, any assets left outside the trust will be “poured-over” or “poured-into” the trust at the time of death.
2. If the settlor received Medi-Cal health benefits or was the surviving spouse of a person who received benefits, the California Department of Health Care Services must be notified of the death within 90 days from the date of death of the settlor;
3. If the settlor has an heir or beneficiary who is incarcerated, notice must be given to the Director of the California Victim Compensation and Government Claims Board within 90 days from the date of death of the settlor;
4. If the size of assets left out of the trust requires probate, the Franchise Tax Board must be notified;
5. Certain forms may need to be filed with the Internal Revenue Service and certain tax related decisions must be made;
6. Certain forms must be filed with the County Assessor and County Recorder regarding any real property the settlor owned; and
7. Notification regarding trust administration must be provided to heirs and beneficiaries and the notification must include specific language required by law.
These are just some of the many things that must be done within a very short period of time upon the death of the last settlor of the trust. Again, given the complexity of trust administration and the responsibilities and potential liabilities facing a person acting as successor trustee, it is highly recommended that the trustee consult an estate planning attorney and a certified public accountant as soon as they become trustee. Typically, trust assets can be used to pay for any fees incurred for consulting professional advisors and such consultation will ensure that legally required deadlines are met and the trust is administered properly and according to California law. Anyone dealing with the above issues should contact the Chilina Law Firm or another law firm focusing on estate planning for legal advice. Do not take your role as a trustee lightly.
Chilina Law Firm, a Professional Corporation, is a full-service estate planning, probate, trust administration, business law, and real property law firm that provides a wide-range of advising, transactional, and litigation services to its clients from its office located in Atascadero, California. The firm’s attorneys represent individuals and business entities in an assortment of transactional and litigation matters involving estate planning (including trusts, wills, powers of attorney, and medical directives), probate, trust administration, as well as general business law, contracts, corporate governance, land use, and real property. Chilina Law can be contacted by telephone at (805) 538-5038 or by email at info@chilinalaw.comor visit the Chilina Law Firm at www.chilinalaw.com. Chilina Law Firm is based in Atascadero, California and serves North San Luis Obispo County communities, including Santa Margarita, Atascadero, Templeton, Paso Robles, and San Miguel.
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