So, your friend or family member chose you to serve as successor trustee for their trust. The time has come for you to step in, now what? Serving as a trustee can be a daunting endeavor. Being named trustee is not an honor, it is a job. It is a job where one can be sued if they act negligently. As a trustee, you have a fiduciary duty to act in the best interests of the beneficiaries. This means you must put their interest in front of your own. You should act with integrity, honesty, and impartiality throughout the trust administration process.
Before accepting trusteeship, a successor trustee should be aware of all the required tasks. This is in order to objectively and faithfully administer a trust per the grantor’s wishes. In order to properly administer a trust, here is a brief guideline of five steps you can take:
1. Collect and Review All Documents, Including the Trust Document.
The first step is to get a full picture of the assets and wishes of the grantor. You must carefully review all available documents to get an understanding of the amount and type of assets in the trust. You will need multiple copies of the grantor’s certified death certificate for the next step. These can be requested from the funeral home or the county in which the grantor resides. This can sometimes take up to 6 weeks, so it is important to request these as soon as possible. Reviewing the trust document thoroughly can help dissolve future problems. Pay special attention to named beneficiaries, initial distributions, discretionary provisions, trustee powers, and if separate shares need to be created.
2. Custody the Assets.
Now that you are aware of all assets, you must secure and value them. Whether that be completing account paperwork to be sure investment and bank accounts are properly titled, securing the property held in the trust, or inventorying the safe in the grantor’s home. You should take an initial inventory of all assets and value them as of the grantor’s date of death. All trusts include a variety of assets. It is your job to be sure all assets are accounted for and secured. If there are any death benefits the trust is entitled to, such as life insurance or retirement accounts, you need to review the beneficiaries of these assets to determine next steps. The transfer or collection of assets will require an original certified copy of the grantor’s death certificate. Be sure you request enough copies of the death certificate in the previous step.
3. Notify Beneficiaries & Creditors.
Your first step is notifying the beneficiaries of your new role. You will also provide your contact information and let the beneficiaries know they are entitled to a copy of the trust. You should also work with the estate planning attorney. With their help, you can file a notice to creditors and prepare any deeds of real property. Some states have specific requirements on the timelines to notify the beneficiaries and creditors. It’s important to do the research, making sure you are following the federal and state law.
4. Pay Any Debts, Taxes, and Final Expenses.
As trustee, you will need to apply for a new tax ID number for the trust. After the Grantor’s death, the trust becomes irrevocable and its own separate tax-paying entity. If you are serving as executor of the decedent’s estate, it will also be your responsibility to file a final tax return for the grantor. As trustee, you will need to pay of appropriate outstanding debts the grantor may have. Also taking on the responsibility of facilitating payment of approved final expenses such as a funeral, cremation, etc.
5. Distribute the Assets Per the Trust Document
Now that you have completed steps 1 through 4, your last step is to distribute the assets in accordance with the terms of the trust. Some trusts will distribute outright to beneficiaries after the administration is complete, while others stay in trust for many years. As trustee, following the grantor’s wishes is a high priority. While also making some tough decisions regarding discretionary distributions to the beneficiaries.
You can rest easy knowing the grantor’s wishes will be honored once you understand these basic steps on how to administer a trust. Never be afraid to reach out to the grantor’s estate planning attorney, financial advisor, or accountant if you are stuck on any of the steps previously mentioned or have any questions.
Many do not wish to burden a friend or family member during a difficult time with these responsibilities and instead choose to name a professional corporate trustee as their successor trustee.
Your Nevada Trust Administrator
Premier Trust can serve as both an executor of a will, in Nevada, and a trustee of trusts from anywhere in the United States. To learn more about the benefits of naming a corporate trustee, send us an email at info@premiertrust.com or give us a call at 702-577-1777.
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