People who get trusts prepared for estate planning purposes often don’t think too much about the work that the trustee administrator will have to do when the time comes to distribute or administer the trust. But there is a lot of work to do, and a not inconsiderable amount of risk and liability goes with all that work. Your administrator – or you if you are acting as a trust administrator – may well end up needing an experienced trust administration attorney from The Sterling Law Group to get you through the process with the least amount of trouble.
There are various core duties that a trust administrator must uphold no matter what else is happening. These duties are generally grouped together as a trustee’s “fiduciary” duties. These are:
While these duties may all seem simple, the legal exposure and implications created by them can be severe. At any time, any of the beneficiaries can sue the trustee claiming a violation of one or more of these duties. Add this to the stress of going through the probate and distribution process, and a trustee can be just a tad overwhelmed by it all.
Within thirty days of the death of the grantor of the trust, the trustee administrator has to file the most current trust and any amendments or codicils with the county clerk in the county where the deceased lived at the time of death. At this point, the trust, whether revocable or irrevocable, now becomes irrevocable. In other words, the established trust asset disbursements can’t be changed anymore without going through a formal trust contest process in probate court.
The next step, which must be accomplished within sixty days of the decedent’s death, is to notify the heirs and beneficiaries of the death of the grantor and their rights as beneficiaries. This notice must be in writing because it starts a 120-day period during which the heirs and beneficiaries can make their objections. Among those is the right to request a copy of the trust and contest the estate.
After you’ve taken these mandatory steps, you can begin carrying out the instructions outlined in the trust instrument. These first steps include locating and valuing the assets, paying any debts, and making the financial distributions, along with any investments or property sales. You may also find that the trust needs to pay current or back taxes. The taxes due may include state and federal income taxes, as well as estate taxes if the state exceeds the exemption threshold (more than $12 million in 2022).
You can do it yourself and, if the estate is extremely simple, you may not face too much risk in doing so. If, for example, the estate is virtually all cash and the beneficiaries are to receive equal shares in winding up the estate, there is a limited risk of complaints.
If you missed a potential heir, you could face a challenge to the entire trust. Moreover, if there is any complexity to the estate, you run the risk of making mistakes – and they can be costly and time-consuming. If you miss a deadline or make an error in a distribution, you can be sued for breach of fiduciary duty. Any of these is daunting and might be better handled by a professional.
If you have been appointed an administrator to trust and are feeling buried by the work and harassed by the heirs, you should consider retaining trust administration attorneys. Instead of waiting until you have a real problem, think about getting legal help. Experienced and skilled trust administration lawyers can help you understand your duties and help you to accomplish them. If beneficiaries or heirs or starting a dispute, they can also help you through that process, even if it evolves into litigation. Contact us or call 916-619-1995 for an initial consultation to discuss how we can help you with your trust administration concerns today.