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Trust Administration

WHAT IS TRUST ADMINISTRATION? 

The goal in trust administration is to oversee your assets for the preservation of your wealth. Having worked all one’s life to maximize the value of your estate, and then have it torn away by mismanagement of one’s trust can be devastating to the heirs and beneficiaries. Trusts are critical and significant documents. Here are some of the key ways we help our clients understand and handle their trust administration duties. 

  • ADMINISTRATIVE TASKS 
  • DISTRIBUTION OF ASSETS  
  • FIDUCIARY DUTIES 
  • TEAM APPROACH 
  • TRUST LITIGATION 

Trust administration is necessary if the person, people, or entity who created the trust are no longer able to manage it themselves, or if they have passed away. We strive to carry out the grantors’ intents while also fulfilling the needs of the beneficiaries. We represent corporate trustees and fiduciaries along with individuals. 

The person (e.g., a family member) named as the successor trustee needs to “activate” the trust before they can perform the duties of the successor trustee. Initiating the trust can involve either of these depending on the situation: 

  1. If the person who created the trust dies, a death certificate is needed to activate the trust for the successor trustee.  
  1. If the person who created the trust is unable to act, then a doctor or other licensed professional certifies that the person who created the trust is incapacitated. 

WHAT ARE COMMON ADMINISTRATIVE TASKS? 

A successor trustee should prepare and record affidavits against real estate or real property owned by a trust to report that the original trustee has died or is unable to manage the trust. The successor trustee must also send proper notification to the county assessor’s office for property tax reporting. 

Under the California Probate Code section 16061.7, a successor trustee must prepare a trust notification to inform all persons involved in the trust when a trust has become irrevocable due to the death or incapacity of its creator. 

A trustee’s job is to notify people, collect the trust assets, pay the trust debts and then distribute the trust assets according to the terms of the trust. If you have not administered a trust, it might be advisable to hire an attorney to avoid making mistakes. As a trustee, you also have fiduciary duties that may or may not be familiar to you. 

DISTRIBUTION OF ASSETS  

Hiring an attorney to help can save money in the long run, and is often not expensive compared to a probate where there is arguing or fighting by trust beneficiaries. While the distribution of assets sounds easy on the surface, there are many areas where people can get into trouble.  

Our attorneys advise our clients on how the assets should be best distributed and what kind of agreement or protection is needed to prevent any future disputes. We may suggest that the successor trustee prepare a distribution agreement or seek court approval for the actions of the successor trustee in the administration. It is essential that the distribution and subsequent termination of the trust be handled correctly to avoid future problems from a greedy beneficiary. 

Administration of a trust often requires some or all of the legal steps below, including: 

  1. Advising the trustee on each of his or her responsibilities. 
  1. Preparing notices of administration, and instructing the trustee as to who must receive these notices. 
  1. Obtaining a Tax Identification (Tax ID) number for the trust, confirming that all assets are correctly titled in the trust, and taking legal steps to correct any improperly titled assets. 
  1. Inventorying the assets of the deceased owner, and obtaining appraisals or date-of-death values for all assets. 
  1. Preparing and filing any court proceedings needed to protect the trustee and beneficiaries from claims by creditors. 
  1. Seeking court approval of the trustee’s actions if the trust terms are unclear, or there is a dispute. 
  1. Paying the creditors of the deceased. 
  1. Determining the best way to allocate the assets to obtain the maximum tax benefits. If the terms of the trust require it to be divided into separate trusts (typically, an estate trust and a survivor’s living trust), we will seek the trustee’s consent to our proposed division. 
  1. Preparing accountings for the beneficiaries and a plan for distribution. 
  1. Preparing deeds and other legal documents needed for distribution and transfer of the trust assets into the names of the persons who have inherited those assets. 
  1. Referring you to an experienced estate accountant for preparation of: 
  • Federal and California estate tax returns for estates valued above the statutory minimum  
  • A final income tax return for the deceased  
  • A trust income tax return at the end of the year  
  • A summary for the beneficiary tax returns

FIDUCIARY DUTIES 

Every successor trustee has a duty to the trust and the trust beneficiaries to administer the trust carefully and with a high moral level of responsibility to the originator of the trust (usually a family member, but not always). These are called fiduciary duties. There are also rules and laws in the California Probate Code on how to properly administer a trust. An attorney can represent you as the successor trustee to ensure that the trust administration is done correctly and smoothly. Examples of fiduciary duties are as follows: 

  • Duty of Loyalty 
  • Duty to Avoid Conflicts of Interest 
  • Duty Not to Delegate 
  • Duty of Disclosure 
  • Duty to Enforce or Defend Claims 
  • Duty of Impartiality  
  • Duty to Keep Trust Assets Separate 

TEAM APPROACH TO TRUST ADMINISTRATION 

TLD Law has a unique capability in advising and representing individuals, families, corporate trustees and fiduciaries regarding their estate planning, trust administration, and related litigation needs. We have created a Trusts Estates Administration and Litigation—abbreviated TEAL—team for handling these matters. Our TEAL team consists of key partners in our Long Beach and Irvine office locations who work together to analyze and strategize the needs of our clients as they arise in this critical practice area. Since the firm’s inception in 1961, TLD Law has been a known powerhouse in the estate planning, tax and asset planning, and probate fields, which are all usually related to trust administration.  

TRUST LITIGATION 

Most trusts and estates are handled without any conflict. There are times, however, when the person in charge does not administer the estate or trust appropriately, which can cause frustration and delays. These cases often enter litigation, and representation is needed to protect the person in charge or to protect the beneficiary. The TEAL team approach at TLD Law has been designed to handle litigation as quickly and efficiently as possible. Some of these areas are: 

  • Prosecution or Defense of a Trust Contest 
  • Heggstad Petitions to Transfer Assets into a Trust that Were Unintentionally Left Out 
  • Financial or Physical Elder Abuse Claims and Restraining Orders 
  • Litigation to Return Property Wrongfully Taken From or By a Trust or Estate (“850 Petition”) 
  • Objections or Defense of Trust Fiduciary Accounting 
  • No Contest Clause Litigation 

TLD Law handles many types of trust and estate lawsuits including elder abuse claims, trust challenges, and fiduciary accounting matters. Our experience in routine drafting and trust administration results in our litigation attorneys being especially skillful and knowledgeable in trust litigation scenarios. 

We offer creative solutions and aggressive handling of trusts and estate matters being litigated in the Southern Californian courts, and appear routinely in probate courts in Los Angeles, Orange, San Bernardino, Riverside, and San Diego Counties. 

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For any trust matter, please contact TLD Law by emailing estateplanning@tldlaw.com   

or by calling (877) 923-0971 to talk to one of our Trusts Estates Administration and Litigation “TEAL” team members directly.