Help Your Trustee and Beneficiaries Prepare
You may be wondering how to ensure that your plan will be administered in the way you desire when the time comes. If the successor trustee you have chosen is a family member or loved one, will that person be able to carry out the role of a fiduciary during a period of emotional stress or mourning? If you have chosen a professional trustee, will your trust be administered smoothly and in accordance with your wishes? Will your beneficiaries have access to trust assets for their care and maintenance during the administration of your trust?
Rest assured that your trustee and beneficiaries are not alone. We are well prepared to help the trustee you have chosen—whether a family member or a professional—to properly wind down your affairs, administer your trust, and ensure that your beneficiaries have what they need during the administration process. Trust administration—and the many tasks associated with it—can be an overwhelming process, but we will be here to guide your trustee along the way.
We can educate the trustee you have chosen about the fiduciary duties that will be owed to the beneficiaries of your trust and answer questions about how to carry out these obligations in practice. In general, a trustee has a fiduciary duty to administer the trust solely in the interest of the beneficiaries and to deal with them impartially. Additionally, the trustee cannot use any of the trust property for his or her own profit or for any purpose not expressly listed in the trust. The trustee also cannot enter into any transaction that would create a conflict of interest between the trustee and the trust or a trust beneficiary.
We can also provide advice and assistance to enable your trustee to competently complete the steps involved in administering your trust. Here are some of the most important steps:
- Locate your estate planning documents (trust document, will, etc.). You can help by letting your trustee know where these documents are kept and by giving the trustee our contact information.
- Collect other important documents such as insurance policies, real estate deeds, car titles, bank and investment account statements, and tax returns.
- Meet with us to plan the strategy for administering your trust and to prepare the legal documents needed to carry out that plan.
- Determine whether there are any debts to be paid, make a list of debts and creditors, and make arrangements to pay off the debts.
- Make a list of all the beneficiaries and heirs-at-law (i.e., the individuals who would be entitled to inherit from you if you did not have estate planning documents such as a will or trust) and their addresses. We can help your trustee determine which legal notices must be sent to them.
- Prepare a list of all your property, accounts, jewelry, and other valuables and obtain a valuation of these items. The trustee will need to locate all property associated with the trust and, over the course of the administration process, will need to take the necessary steps to change the names on any bank and investment accounts. Every account and piece of property owned by the trust will need to be included on the list, as well as the value of each account and piece of property as of the date of your passing. For some types of property, an appraiser may need to be hired to get an accurate value.
- File all the necessary tax returns and pay any taxes due. This could include not only the trust income tax return (Form 1041) and the estate tax return (Form 706), but also the final income tax return (Form 1040). An estate tax return may need to be filed even if there are no estate taxes for a surviving spouse to take advantage of certain tax exemptions.
- Maintain the trust accounting, that is, keep a record of all deposits, expenses, and transfers from the trust. Copies of this record will need to be provided to all of the beneficiaries of the trust.
- Understand which property and money are included in the trust, and ensure that they are allocated and transferred to your beneficiaries in a way that reflects your intentions as expressed in the trust. This will probably involve the use of deeds or other transfer documents, which we can help prepare. In addition, the trustee will need to obtain signed receipts from each beneficiary when the transfer of property or money occurs.
This list may seem intimidating, but we are here to help guide your trustee through each step in the process. The future is full of uncertainties, but one thing you can be sure of is that we are here to help implement your wishes according to your intentions and can guide your trustee through all the steps involved in administering your trust.
Article on Trustee Accounting