The Trust Administration Process

by | Jun 16, 2020 | estate planning

trust administration process

Trusts are a common tool used in estate planning to help avoid probate, among other benefits. If you are considering including a trust in your estate plans, or if you are the beneficiary of a trust, you may be wondering about the trust administration process. One thing you should be prepared for is that the trust administration process does take some time, even though you may avoid having to go through probate.

If you are thinking about creating a trust or getting started with any other forms of estate planning, an experienced California estate planning attorney can help. Contact the attorneys at Galanti & Copenhaver, Inc., for all of your estate planning needs. Give our office a call today to schedule a meeting with one of our attorneys to begin the process of moving forward with your estate plans.

What is a Trust?

A trust is a legal arrangement used in estate planning in which the creator of the trust (known as the grantor) transfers legal title of their property or assets to the trust. The trust will be managed by a trustee who has the responsibility of managing the assets within the trust for the benefit of the trust beneficiaries. 

The trust beneficiaries are individuals or charitable organizations that will receive the assets of the trust (typically at the time of the death of the grantor of the trust). As the grantor of the trust, you can also serve as the trustee of your living trust, which means that you retain control of the property held in the trust. 

Choosing a Trustee

However, you will need to name a successor trustee to manage the trust and distribute the trust property after you pass away. The successor trustee that you choose will also have additional responsibilities, so it is important to choose someone reliable to serve as the trustee. You can also opt to have your attorney or a bank take on this role, but keep in mind that there are additional costs associated with that option, as the trustee is entitled to payment for their services.

What is the Trust Administration Process?

The trust administration process will typically begin after the grantor of the trust dies. There are a few steps that must occur before the beneficiaries of the trust can receive their share of the trust property. If you are the beneficiary of a trust, you should keep in mind that the trust administration process can be lengthy. 

Providing Notice of the Trust Administration

The law requires that the trustee must give notice of the trust administration to all of the legal heirs and beneficiaries. If any party wishes to contest the terms of the trust, they must do so within 120 days. At this time, the trustee will also typically give notice to any creditors. 

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Creditor Claims

If a creditor wishes to make a claim against the trust, they have a designated time period in which to do so. If they do not make their claim within the allotted time period, they risk not being paid. The trustee will ensure that any valid claims by creditors are paid, and that other valid trust-related expenses are paid.

Identify the Trust Property and File Tax Returns

The trustee will also need to make sure that all trust property is properly identified and obtain appraisals for the property. This step is important for future tax purposes.

Additionally, the trustee has the responsibility of filing any tax returns. This step can include filing the personal returns of the deceased grantor of the trust, the taxes for the trust, and taxes due from the probate estate if applicable under the circumstances.

Prepare the Trust Accounting

The trustee has a legal duty to prepare a trust accounting document. The California Probate Code states the necessary items to include in this document and provides a basic format for preparing it.

Create a Distribution Plan and Distribute the Property of the Trust to the Beneficiaries

Before the beneficiaries can receive assets or property from the trust, the trustee must first prepare a distribution plan. The distribution plan must follow the terms of the trust, and the trustee should make an effort to minimize expenses where possible. In addition, the trustee must also obtain the consent of the beneficiaries prior to moving forward with the distribution.

Finally, the trustee will then be able to distribute the property of the trust in accordance with the distribution plan. This process may include title transfers, deed preparations, and other tasks that are required to settle the trust. Contact us today at 707-538-6074 or fill out our online contact form to see how Galanti & Copenhaver, Inc. can help you. 

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