You followed the competent advice and created an estate plan. Your plan includes revocable trust as the cornerstone. In preparing your plan, you put long and careful thought into who to appoint for all major decision-making roles – including those who will serve as the successor trustees of your revocable trust. Your carefully selected family members or friends will now ask you, “What do I have to do?”. Although every plan is different, this legal update is intended to give you and your trustee an overview of their role.
The successor trustee job throughout your life.
Successor trustee duties usually begin after your death. However, in certain circumstances, a successor trustee may be required throughout your life. If you become incapacitated and can no longer act as a trusted trustee, be it temporary or long-term, your successor trustee will manage the assets already titled on your trusted behalf. If you hold assets outside the trust, your financial agent (appointed by your financial authority) has authority over those assets. In this case, the trustee and the financial agent, if not the same person, must coordinate their efforts and the trustee may request the financial agent to transfer assets into the trust. Your trustee and agent will work together to pay your bills, file your income tax returns, make investment decisions, and generally do all of the things you would do with your finances if you were able.
Trustee’s Obligations After Your Death
First, realize that the trustee has many responsibilities. The basic steps after death are to collect your assets (a task that you can do during your life by titling the assets in the trust and updating the names of the beneficiaries), paying your final bills and expenses, and the remaining assets according to the provisions of the trust to be distributed. The trustee will likely need to work with an attorney to ensure they understand the specific duties required to administer the trust and need assistance in performing those duties. It may sound like a daunting job, but with help it will be manageable.
Is there a personal representative?
A trustee’s duties after your death may depend on whether an estate of your estate has been brought into court. Remember you nominate a personal representative in your will and the court appoints the nominated person as a personal representative. That is, when there is no legal process, there is no personal representative empowered to act. If during your lifetime you did what was necessary to avoid inheritance (i.e. funded your trust and updated beneficiary names), the trustee will take care of everything, including the things a personal representative would otherwise do and it no legal process is required. When probate proceedings are required, the trustee and the court-appointed personal representative will work together. Often times, it is most efficient to appoint the same person as your trustee and personal representative to optimize this coordination. For this legal update, we will assume that you have avoided probate proceedings and that your trustee is solely responsible for managing your assets.
Review and notices.
The trustee must carefully review the trust document to determine who the beneficiaries are and their interests in the trust assets. In most cases, the trustee is required to send notices of the existence of the trust to all beneficiaries.
The trustee reviews the trust document to see if there are any assets that are specifically intended for specific individuals or charities (called specific estates). For example, there may be certain estates from items of tangible personal property, such as jewelry, antiques, automobiles, etc. There may also be certain monetary estates to individuals or charities, or certain estates from stocks or a residence.
The trustee may also publish a notice to the creditors. A notice to creditors includes a date before which creditors must file a claim, otherwise they will be denied receipt of payment. The date is 4 months from the publication date. Publication in a local newspaper is used to make unknown creditors aware of the date of the claim. If the Trustee has knowledge of a obligee, the Trustee must send that obligee a notice stating the claim date so that the obligee will be excluded from filing a claim after that date. Otherwise, the obligee has a full year from the date of your death to file a claim.
Inventory assets.
The trustee then identifies all of the assets belonging to the deceased at the time of his death and what their title is. For example, whether the assets are held in trust under the name of the beneficiary or jointly titled with another person. The trustee must obtain information to evaluate these assets at the time of your death. The trustee arranges for the valuation of assets that cannot be readily determined. Most of the assets contained in your estate will be given a new base equal to their value at your death, and the trustee will work with your investment advisor or institution to ensure that the base is adjusted.
The trustee also “collects” your assets. This includes opening new accounts on behalf of the trust with the name of the trustee and a new tax identification number for the trust.
The trustee ensures that all accounts with a common name or with a beneficiary designation are properly transferred to the next owner by presenting a death certificate to the account holder. If there are assets that would otherwise be the subject of probate proceedings but you were executing a non-inheritance transfer document such as a Wisconsin Marital Property Agreement prior to your death, the trustee will make efforts to rename those assets outside of the court process.
Tax returns and invoice payment.
The trustee is also responsible for making sure that all of your final debts and expenses are paid. This includes all medical bills, funeral bills, outstanding taxes (property, income, etc.), utilities, and the like. When the debts and expenses exceed the assets, the debts are paid in a specific order. Therefore, it is important to consult the lawyer who is assisting the administration before making any commitment. Subscriptions or automatic withdrawals should be canceled and bank statements reviewed to determine what refunds, if any, are required. The trustee pays the ongoing bills and keeps detailed records of all the trust’s activities. A statement is made for the activity, starting with the initial inventory, adding income or other income, and subtracting payment of all expenses and distributions. The bookkeeping is distributed to the other beneficiaries.
The trustee must arrange for the preparation and filing of your final income tax return and any income tax returns due on the trust after your death. The trustee will also file a federal estate tax return, if one is due, as well as any government estate tax returns that may be due.
Distributions and Liquidations.
The trustee distributes the assets that are subject to certain estates and the trustee may have to sell some or all of the trust assets that are not subject to any particular estates. For example, if the residence is not to be distributed to one or more beneficiaries, the trustee has the responsibility to determine whether the residence needs to be sold and, if so, put the home on the market and sell the home and collect the sales proceeds . Alternatively, the trustee can distribute the house to the beneficiaries and the beneficiaries will then have that responsibility, although this can be much more difficult to coordinate.
When all other duties of the trustee are completed, the trustee divides the remaining property according to the trust document. This can mean distributing assets directly to the beneficiaries or creating new trusts for the beneficiaries. When new trusts are created, the trustee may need to apply for new tax identification numbers and open new investment accounts for the new trusts. The trustee may also be responsible for managing these new trusts, or a new trustee may need to be added. It depends on what you stated in the document.
Your trustee is not alone.
Remember, your trustee is not alone. We will be here to make sure the trustee is not overwhelmed and has the support and protection he or she deserves to take on this responsibility. The cost of using professional support, e.g. B. The help of lawyers and accountants are costs of the trust, not the trustee himself. Therefore, these fees are paid out of the trust assets before the final distributions are made.