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Trust Administration

In creating a trust, the settlor appoints a trustee (usually him or herself), nominates successor trustees (typically family members) and funds the trust with assets. Upon the settlor’s incapacity or death, the first successor trustee assumes the trust administration duties. Most successor trustees, however, are unprepared because they lack trust administration knowledge and experience. They need the help of an experienced trust attorney. Nevertheless, certain steps must be taken to preserve favorable tax treatment (if applicable), and to fulfill their fiduciary duties. This is called “trust administration.” Its complexity depends on a variety of factors, including the type of trust, subtrusts, trust assets and the opportunity to eliminate or minimize estate taxes. Below is a checklist of all that needs to be done in that process.

Trustees should hire a trust attorney to assist them in the trust administration process. Even experienced, professional trustees would never attempt to administer a trust without the advice of an experienced trust attorney. We have the experience you need. We can help minimize your personal exposure to liability while reducing your stress. Moreover, we will guide you in the right direction.





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Trust Administration Process Checklist

STAGE ONE:
1. Conduct a thorough search for all estate planning documents. Look for all current and revoked wills, pour-over wills, trusts, powers of attorney, trust amendments and restatements, trust schedules, trust asset lists, and deeds to trust property. Put all documents in order based on date of execution.
2. Collect all previously prepared trust related documents such as estate tax returns, gift tax returns, trust tax returns, prior accountings of trust assets, notices of proposed action, and any principal and income adjustment actions.
3. Determine whether the Uniform Prudent Investor Rule applies to the trust.
4. Read estate planning documents, and set aside any previously revoked documents. Once you find the most current trust, read it carefully again from beginning to end. Make notes of anything you find unusual (note the page and paragraph number in your notes for easy reference).
5. Identify all interested persons, including heirs, successor trustees, current beneficiaries and remainder beneficiaries. Obtain their complete names, addresses, telephone numbers, email addresses, age, and any other contact information you can find. (Warning: failure to use due diligence in correctly identifying, locating and notifying all interested parties could expose you to financial liability.)
STAGE TWO:
1. Retain legal counsel to assist you with trust administration duties. You have the legal right to use trust funds to pay an attorney to assist you with the administrative process. Failing to retain counsel is not a valid defense for any errors made during the trust administrative process.
2. Initial meeting with your attorney:
1.) start by understanding your attorney’s scope of representation
2.) make sure your attorney reviews trust terms with you
3.) make sure your attorney explains your fiduciary duties as trustee
4.) make sure your attorney reviews trust circumstances and purpose with you
5.) discuss any emergencies (pending litigation, needs of beneficiaries, etc.)
3. Obtain tax payer identification number for irrevocable trusts. If you are the Trustee you can obtain that number by calling the Internal Revenue Service at: 1 (800) 829-4933.
4. If you have liquid trust assets, immediately open a trust checking and savings account. Make sure you maintain a penny accurate accounting of all trust assets. Your deposits must be FDIC insured.
5. Establish a record keeping system. At a minimum it should include folders for financial records, beneficiary communications–including notes from telephone calls and copies of all letters sent and received, beneficiary meeting minutes and a journal of actions and communications.
6. Make a complete and detailed inventory of all trust assets. Each asset should be described and immediately assigned a date of death value for estate tax purposes. If you have assets that are difficult to value, consider hiring a professional appraiser. Discuss it with your attorney.
7. Review trust assets and make and implement decisions concerning the retention and disposition of assets, in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust, and with the requirement of Probate Code Section 16049.
8. Send Probate Code Section 16061.7 Notice to all named beneficiaries and heirs within 60 days of the settor’s death.
9. Determine whether the amount of trust assets warrant an investment manager. If investment decisions are necessary, meet with your attorney regarding the drafting of investment strategy guidelines and to determine if court approval is necessary to carry out the strategy.
STAGE THREE:
1. Divide trust assets into subtrust as required under the terms of trust.
2. Publish and send appropriate creditor notices.
3. Pay attention to the following dates:
1.) Probate Code Section 13100 affidavit (no sooner than 40 days after date of death “DOD”)
2.) Alternate asset valuation date (6 months after DOD)
3.) Disclaimer (9 months after DOD)
4.) Form 706, Estate Tax Return (Due 9 months after DOD or file extension)
5.) Change of ownership forms (Due 150 days after DOD)
6.) Medi-Cal Notice to Dept. of Health Services (90 days after DOD)
4. File notice of death of real property owner with the county assessor’s office.
5. Prepare and send accounting to beneficiaries identifying all assets, debts, income and expenses.
6. Distribute assets to beneficiaries (at least 120 days after giving 16061.7 notice)
7. Obtain receipts from beneficiaries showing proof of distributions.

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  • After my first son was born, I went to Jason to get a living trust. Knowing that such a critical document was in the hands of somebody who is so knowledgeable on the topic put me and my wife at ease. His professionalism throughout the entire process was excellent and his moral and ethical standards are second to none. He provided sound advice and always kept our best interests in mind. I would recommend Jason to anyone who needed legal advice for estate planning or probate matters. Kyle T.

  • I have used Jason Gaudy for legal assistance on more than one occasion now. Every time I have received professional, sound, and ethical advice at an affordable price. I highly recommend him for general legal advice or for his specialty of wills, trusts, and estate planning. Eric G.

  • Jason Gaudy and the rest of the staff made the often confusing and frustrating task of preparing our will and trust easy and pain free. They walked my wife and I through the entire process and answered all of our legal questions. I will work with Jason again and would highly recommend anyone else to work with Gaudy Law. Bryan A.

  • Jason and his team have been nothing but amazing. They drafted a trust, will, and power of attorney for my mother within a matter of days based on an emergency circumstances. ... I have since referred over 15 people to Jason and continue to do so every chance I get. I have nothing but positive things to say about Jason and his staff. Call his office and you won't be disappointed. Michael R.

  • Best lawyer, period. I have had to work with lawyers in the past, but Jason and his staff and attorneys have made things so easy for me and my wife. I found the office when looking for an attorney to prepare a living trust. Not only did Gaudy Law prepare my trust, but the office is now the lawyer for me and my business. I can't say enough about how great they have taken care of us. Keep up the great work! J. Mel

  • Efficient, insightful and professional. Gaudy Law has advised our family on numerous issues and always has provided beneficial help. I strongly recommend this firm and Jason Gaudy. He is an honest and hard working individual who will give his best when hired. John Witty

  • You will not find a man with more moral fiber than Jason Gaudy. Through the few years that I have known him, he has continued to show me his ability to be a strong, admirable, family-man that I highly respect. Regardless of the situation, you should know that you will be in good hands and that Jason will have your best interests in mind. I highly recommend Jason Gaudy and Gaudy Law for any of your legal needs. William McGee

  • I have know Jason for over 15 years and I can say confidently that you will not find a more hardworking, honest, and professional person to work with with. I would strongly recommend Jason Gaudy and Gaudy Law to all. John Mohlengraft

  • Professional, friendly, and knowledgable are some of the best words I can use to describe Gaudy Law! They made estate planning easy-to-understand and gave thorough explanations so that someone without a law background can comprehend everything that is being said. We highly recommend Gaudy Law to all of our friends! Laura Kovacs