Administering a Living Trust

As administrator or trustee to a living trust, you are considered liable for any substantial damage to the trust. Ideally, the grantor kept a trust portfolio while he was alive that can be used to ensure a smooth transition. If not, you’ll have to begin the same way someone executing a will begins.

Obtain the Living Trust Document

Obtain a copy of the living trust document and read through the entire trust. There will be valuable information in the trust document detailing which properties are already in the trust and which properties must be poured over. There should also be a list of trust assets attached to the trust document. This list will be your greatest asset when administering the trust.

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Collect and Compile Trust Assets

Unless the grantor kept the trust assets organized in a portfolio, you will need to locate and gather all applicable trust asset documents. This includes deeds, wealth management portfolios, bank lock-box keys, house keys, and any small valuable items that the grantor left in the home. During this collection phase you should also obtain any car keys and title, bank account numbers, and retirement and life insurance account contracts.

Transfer Property

Obtain the forms to transfer any property that has not already been placed into the trust. For instance, you will need to obtain a car title from the DMV and change ownership from the decedent to the trust. When doing these transfers, a copy of the decedent’s death certificate and copy of the trust document will most likely be required.

Appraisals

If the trust was a revocable living trust, then you must obtain appraisals of all property in the trust for tax purposes. Remember that estate taxes must be paid on revocable living trusts because the property was still be under the control of the grantor at his time of death. If the trust is an irrevocable living trust, then you may skip this step.

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File Tax Forms

Obtain a federal form 706 and the applicable state form to pay the applicable estate taxes. If the decedent died in 2010, then there are no federal estate taxes. Also obtain a final income tax form for the decedent and pay any required income taxes. Tax forms must be filled out within a timely manner to avoid penalties for late filings.

Pay any Bills

All final bills must be paid out of the decedent’s wealth. To ensure all creditors are paid, obtain a credit report and contact all possible creditors. In addition, pay any final utility bills and any other monthly bills. Be sure and contact each of these businesses to inform them of the decedent’s death, so that they do not continue sending out bills.

Manage the Trust

From this point forward, it is your responsibility to manage the trust. This entails properly investing trust assets to increase the value of the trust and distributing payments as specified in the trust document. Remember that you are the caretaker of the trust and must always follow the grantor’s wishes.

If you have been assigned the role of trustee and have any questions or concerns, contact an estate planning attorney for a consultation and assistance. Remember that it’s always better to ask advice than to make a mistake that could end up costing you much more out-of-pocket.

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Case Studies: Administering a Living Trust

Case Study 1: Obtaining and Reviewing the Living Trust Document

As the trustee of a living trust, John is responsible for administering the trust following the grantor’s passing. His first step is to obtain a copy of the living trust document and carefully read through its contents. By doing so, John gains valuable insights into the assets already in the trust, properties to be included, and any special instructions or provisions.

Case Study 2: Collecting and Compiling Trust Assets

Sarah’s father recently passed away, leaving behind a living trust. As the trustee, Sarah needs to locate and gather all relevant documents pertaining to the trust assets. This includes deeds, wealth management portfolios, bank account information, keys to safe deposit boxes, and other valuable items.

By diligently collecting and organizing these trust assets, Sarah ensures a smooth administration process and maintains accurate records.

Case Study 3: Transferring Property

After the death of her mother, Lisa, as the trustee of the living trust, must transfer the ownership of certain assets into the trust. This includes obtaining the necessary forms to transfer properties such as cars, ensuring proper documentation, and providing a copy of the death certificate and trust document as required.

By completing these transfers, Lisa ensures that the trust holds legal ownership of the assets and aligns with the grantor’s intentions.

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