Issue 6.17
Many people are familiar with Trusts. In recent years, a Trust has become a popular Will substitute. Many people have decided to use a Trust as opposed to a Will in doing their Estate Planning. The primary purpose is to avoid probate and maintain privacy at the time of one’s death.
However, many people after doing their planning have the question, “What do I do when someone dies and I am named as a Successor Trustee?” First, although the Trust avoids probate and makes estate administration easier, it certainly does not avoid all headaches. When someone dies, even if there is a Trust, there is work that must be done.
One of the first things needed in administering a trust estate is a Death Certificate. In fact, for most estate administrations it is advisable to obtain many Death Certificates. You may find it necessary to have an original Death Certificate for each asset owned by the Trust. Very often, the institution with the record of ownership for the asset wants an original Death Certificate to show that the Successor Trustee is now in authority. The good news is that if the asset is titled in the name of the Trust nothing more than a Death Certificate should be needed to clear title.
Upon the death of the Trust maker, the Successor Trustee will need to contact all institutions and show the institutions that they are now the acting Trustee and in control of the assets.
In addition to the above directions, the Successor Trustee must be prepared to do an accounting to all beneficiaries. Additionally, the Trustee will be responsible for paying all bills.
If the Trustee desires to cut off potential creditor’s claims, the Trustee can publish notice to unknown creditors and mail notice to known creditors. By providing notice to creditors, the Trustee can shorten the creditor’s right to submit a claim from a one year statute of limitations to 90 days.
Eventually, the Trustee will distribute money or assets of the Trust to the beneficiaries. When this time comes, a prudent Trustee should get a receipt and release from each of the beneficiaries. This document acknowledges receipt of the monies and releases the Trustee from any further liability to that particular beneficiary.
As a final matter, there may be tax matters that the Successor Trustee must address. Likely, the Trustee will need to obtain a tax identification number for the Trust. This tax identification number becomes the way to identify the Trust for IRS purposes. Upon the death of the Trust maker, the social security number can no longer be used. The Trustee should be prepared to file an income tax return, if necessary, for the Trust, as well as an estate tax return if the Trust exceeds the federal estate tax threshold which in 2017 is $5,490,000.
Hopefully, this brief article provides some guidance to Successor Trustees. Although a Trust can help significantly the estate administration process, as evidenced by this article, it cannot eliminate all work related to the passing of a loved one.
Jeffery J. McKenna is a local attorney licensed in three states and serving clients in Utah, Nevada, and Arizona. He is a partner at the law firm of Barney McKenna & Olmstead, with offices in St. George and Mesquite. He is a founding member of the Southern Utah Estate Planning Council. If you have questions or topics that you would like addressed in these articles please email him at jmckenna@barney-mckenna.com or call 628-1711.