The most commonly used type of trust is the revocable living trust, and we are going to focus on the administration of these trusts here. We will look at the administration of irrevocable trusts in a future post.
The First Steps
When you establish a living trust, you are called the grantor of the trust. As the grantor, you serve as the trustee while you are alive and well, and you also act as the beneficiary.
You make the trust the owner of the property that you want to pass along to your loved ones after you are gone. However, you have total access to any property that you convey into the trust every step of the way. At any moment, you can utilize the assets in any way that you choose.
In the trust declaration, you name a trustee to succeed you after your passing. This can be an individual that you know personally, or you can alternately use a professional fiduciary.
Trust companies and the trust departments of banks provide trustee services, but of course, they charge fees. In spite of this, a professional trustee can be the best choice under some circumstances.
After Your Passing
The first thing to understand about the living trust administration process is the simple fact that it is not subject to probate. This is a legal procedure that takes place under the supervision of a court.
It would enter the picture if you were to use a simple will instead of a living trust. Probate is time-consuming, it is expensive, and it is a public proceeding, so privacy is lost.
When the process is initiated, the trustee will identify and notify the beneficiaries and obtain copies of the death certificate. The trustee will notify the Social Security Administration if it is necessary, and the Department of Health will be notified.
All of the assets will be inventoried and secured by the trustee, and appraisals may be necessary. The trustee will notify creditors and pay outstanding debts.
A Taxpayer Identification Number will be obtained, and the trustee will gain an understanding of the trust investments. Along the way, the trustee will keep accurate records.
A grantor will usually instruct the trustee to distribute all the assets and close the estate as soon as possible. However, it is possible to keep the trust intact for an extended period of time so the trustee can make incremental distributions to a beneficiary.
This is necessary when a minor is a beneficiary, and there can be a motivation to provide limited long-term distributions to an individual that is not a good money manager.
Attend a Free Seminar
We conduct seminars on an ongoing basis to give people the opportunity to obtain important information about the estate planning process. The sessions are held at various locations throughout our service area, so you should be able to find a seminar that works for you.
There is no admission charge, but we ask that you register in advance so we can reserve your spot. To see the schedule, visit our seminar page. When you identify the session that you would like to attend, follow the simple instructions to register.
Need Help Now?
If you are ready to put an estate plan in place, we are here to help. There are many ways to proceed, and the optimal course of action will depend upon the circumstances. We can gain understanding of your unique situation and your legacy goals and explain your options.
When you decide to move forward, we can develop a custom crafted plan that is ideal for you and your family. You can call us at 860-548-1000 to schedule a consultation appointment, and you can fill out our contact form if you would prefer to send us a message.