The establishment and proper administration of a trust can be a valuable tool in the planning and distribution of your estate. Revocable Living Trust and Irrevocable Life Insurance Trusts can provide assurance of the proper distribution of your estate, as well as substantial tax benefits and peace of mind.
At Howard Law, our Los Angeles trust lawyers recognize the value that proper estate plan and trust formation and administration can have for any estate. But we also understand the proper trust administration must be part of a comprehensive estate plan. Trust administration requires the knowledge and skills of an experienced professional capable of ensuring that you avoid common pitfalls and receive all of the trust benefits to which you are entitled.
The establishment and correct funding and administration of a Revocable Living Trust can eliminate the expense, hassle and public disclosure inherent in settling an estate through probate court. But the benefits are not automatic and require the knowledge and resources of an experienced trust administrator.
Once created, a trust should be funded with full knowledge and understanding of the various tax implications and other advantage and consequences. During its lifetime, proper administration of trust assets will be required to ensure your estate is not left with an underfunded or stale trust at the time of your death. The complexity of trust administration is limited only by the sophistication of the trustee. Trusts that involve complex assets, will require a greater degree of sophistication. Failure to properly administer a trust can result in unforeseen tax, valuation, allocation or legal consequences.
In many cases, the trustee of a Living Trust is its creator - you in other words. In other cases, a trustee may appoint a professional administrator. In either case, a chosen successor is charged with administering the trust after your death. A trustee must adhere strictly to the terms outlined in the trust documents.
At Howard Law we understand that many of the benefits of a trust can be lost by inadequate administration and our Los Angeles estate planning lawyers provide comprehensive trust representation throughout the life of your turst: from creation and funding, to its administration and ultimate dissolution.
Trust Administration Upon Death
Within 60 days of death, a trustee is required to send notice to each heir and beneficiary, advising them of the start of the post-death administration period. A copy of trust terms must also be provided to any heir or beneficiary who requests it. Beneficiarie have 60 days from the date they receive copies of the terms of the trust or 120 days from the notice date (whichever is later) to contest the trust.
Duties of the trustee include asset management, collection, investment and distribution. He or she must also inventory all assets and determine their fair market value. Trustees are also charged with paying routine administration fees - including taxes, accounting and attorney fees - and maintenance or other expenses related to trust property.
Additionally, a trustee has a duty to keep heirs and beneficiaries informed about the status of the trust and its administration, including annual accounting disclosures. Even in cases where a formal accounting is not required, one should be conducted to create a formal record and an official document upon which to prepare income tax returns. Upon request by an heir, a trustee is also required to provide a report regarding assets, liabilities, disbursements and other trust activities.
A trustee will also be required to settle trust taxes, including estate taxes, within nine months of a decedent's death. And, in the event that a trust directs any beneficiary's interests to be further held in trust (as in the case of a minor), sub-trusts will need to be properly established and administered.
While trusts can be a powerful estate planning tool, providing for their proper funding, administration and dispensation is best left to a veteran California trust attorney. If you are considering establishing a trust, are interested in updating a trust, or need advice in administering a trust fund, contact Howard Law today for a confidential consultation to discuss your case.
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