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The ABCs of Trust Administration

The ABCs of Trust Administration

  1. WHAT IS A TRUST?

A trust is nothing more than a contract. If you are married, it would be a contract between you and your spouse, establishing a manager for your assets, stating how your assets will be handled while you’re both alive and what would happen to your assets at the death of one or both of you.

  1. WHO ARE THE PLAYERS?

Creator= You are the creator and in the trust you may be referred to by any of these terms: “Settlor”, “Grantor”, “Trustor”

Manager = you during your lifetime and in the trust document you are called the “Trustee” and have the power to appoint the Successor Trustee at your death

Beneficiary = during your lifetime you are the beneficiary and afterwards, whomever you select

  1. WHY?

Trusts are created to save money and save time and keep you out of court. Trusts allow you to avoid probates, conservatorships, and guardianships.

  1. WHAT IS TRUST ADMINISTRATION?

Trust administration is similar to probate, but it takes place without court supervision. Your successor trustee steps in at your death or incapacity and reads your trust to carry out its terms. The job of the trustee is threefold in nature – 1) marshal the assets 2) pay the bills 3) distribute the assets pursuant to the terms of the trust.

  1. HOW TRUST ADMINISTRATION BEGINS

Trust administration begins with a required notice to all beneficiaries and heir of the settlors within the 60 days of the trust becoming irrevocable.

  1. HOW LONG DOES TRUST ADMINISTRATION TAKE?

It depends on the trust itself, whether or not it’s a simple trust or a complex trust and the size of the estate. Trust administration could be completed in as quickly as six months or it could take years. The trust document is a “road map” for your successor trustee to carry out its terms.

  1. WHAT ARE SOME OF THE STEPS IN TRUST ADMINISTRATION?

  • The trustee would send out written notices to your trust beneficiaries and your heirs.
  • The trustee, or whoever has possession of the will, must file the will within 30 days of the testator’s death.
  • An affidavit of death, along with the original death certificate, should be recorded with the county recorder’s office. A preliminary change of ownership report is included with the affidavit.
  • To preserve the low property tax basis from a parent to a child and to allow the child to keep his parents’ low property taxes, file the Proposition 58 notice.
  • Draft notices of proposed action to protect the trustee in handling the trust estate.
  • Allocate the trust estate to sub-trusts or distribute the assets pursuant to the terms of the trust.
  • Prepare receipts and releases for the beneficiaries to sign.
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