TRUST ADMINISTRATION – DUTIES OF SUCCESSOR TRUSTEE IN GENERAL
- Make an inventory of assets;
- Pay debts and taxes; and
- Distribute the remaining assets to the designated beneficiaries, including any ongoing successor trusts.
TRUST ADMINISTRATION – TRUSTEE’S ESTATE TAX OBLIGATIONS
An important part of trust administration for a single-settlor trust is frequently the allocation, payment, and reporting of estate taxes. Currently for a $10 million applicable exclusion amount ( with adjusted for inflation in 2019 is $11,400,000 ) and a 40 percent maximum tax rate.
Prepare Certification of Trust and Affidavit of Death of Trustee
REQUEST INFORMATION FROM FINANCIAL INSTITUTIONS
Before a trust administration, a successor trustee must request necessary information from financial institutions. This includes preparation and sending:
Letters to banks, mortgage companies, savings and loans, brokers, and mutual fund companies, requesting:
(1) Cash account balances;
(2) Date-of-death values of stocks, bonds, and mutual funds; and
(3) Exact principal balance and accrued interest as of the date of death for accounts paying interest, if statements are insufficient;
(4) Loan balances on all secured and unsecured loans.
Letters of instructions to brokers (enclose a copy of the death certificate, certification of trust, and taxpayer identification number (TIN) for the administrative trust), requesting:
(1) That brokerage accounts be transferred into the name of the successor trustee; and
(2) Date-of-death values for all assets held by the broker.
Letters to insurance companies requesting:
(1) Claims forms;
(2) An IRS Form 712 for each insurance policy in which decedent had incidents of ownership, including policies on lives of persons other than decedent; and
Information on any annuities.
Letters to employers, plan administrators, and IRA sponsors concerning retirement benefits, requesting:
(1) Copies of beneficiary designations on file;
(2) Claims forms; and
(3) Copies of plan documents to analyze beneficiary options.
TRUST ADMINISTRATION -DETERMINE AMOUNT OF CASH
Trust administration includes determination of cash in the estate
The trustee should obtain the following:
(1) Copies of, e.g., bank account statements, certificates, passbooks, for each account, including money market cash held in brokerage accounts;
(2) List of all checks received but not deposited by date of death; and
(3) List of any expectancies of cash due at the date of death, e.g.:
(a) Income tax refunds;
(b) Medical insurance claims;
(c) Deposits or refunds due; or
(d) Wages due.
When trust administration is in effect, the trustee should determine amount of cash on settlor’s person and in settlor’s car, residence, business, and safe deposit box, including foreign money or coin collections. The trustee should obtain:
- Date-of-death exchange rate of foreign money; and
- Appraisal of valuable coins or collection.
TRUST ADMINISTRATION AND MEDI-CAL
Trust administration might involve preparation Medi-Cal Notice and Other Public Agency Notices
WHEN NOTICE REQUIRED
If your trust administration for the settlor who was receiving Medi-Cal or his/her surviving spouse receiving Medi-Cal benefit, Medi-Cal Notice to the California Department of Health Care Services within 90 days from the date of death if settlor.
Victim Compensation Board Notice
During a trust administration a notice to the Director of the California Victim Compensation Board should be send within 90 days from the date of death if settlor has an heir or beneficiary who is incarcerated.
Franchise Tax Board Notice
Send a notice of administration of the estate to the Franchise Tax Board within 90 days after the date letters are first issued to a general personal representative if a probate proceeding is initiated.
TRUS ADMINISTRATION – PREPARE NOTIFICATION LETTER
One of the important steps of the trust administration is preparation notification to send to beneficiaries and heirs containing the following information :
Identity of trust settlor;
Date of execution of the trust instrument;
Name, address, and telephone number of each trustee;
Address of the principal place of administration of the trust under Probate Code 17002
Any additional information expressly required by the trust instrument;
Notification that the recipient is entitled to a copy of the terms of the trust on reasonable request to the trustee; and
A warning set out in a separate paragraph in not less than 10-point boldface type, or a reasonable equivalent, stating:
You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later.
CANCEL CREDIT CARDS AND NOTIFY CREDIT REPORTING AGENCIES
Cancelation credit cards and notification credit reporting agencies during a trust administration would prevent the decedent’s estate from the future potential identity fraud.
The first step in handling this part of the trust administration is mutilating all settlor’s credit cards and return them to the issuers promptly with a statement of the date of death.
The second step in handling this part of trust administration similar notices to traders and business firms from which decedent made purchases on credit. Enclose an extra copy and ask that receipt of the notice be acknowledged by signing and returning the copy.
Lastly, the successor trustee should reach the three national credit reporting agencies (Equifax, Experian, and TransUnion) to close the decedent’s credit profile.