Whether you are in the process of planning your estate, or you have recently lost a loved one and are navigating the estate administration process, Don Ho Law is here to offer you competent and capable assistance.
What is involved in administering a trust?
When a person dies who has a trust, the person named as trustee must then manage the assets in that trust. This process is similar to the probate process used for wills, the primary difference being that the trust administration process is not supervised by the court.
There are six main steps that a trustee must take in order to properly administer a trust:
- First, California Probate Code § 16061.7 requires that the trustee send notice to all of the beneficiaries and heirs of the trust, so that any contests to the trust can be filed. Serving notice can be a complex process, especially if there are several beneficiaries. It is important to consult an attorney at the beginning of the trust administration process, so that nothing is missed or done improperly.
- The second step requires that the legal title on any houses or land in the trust be transferred to the trustee, who can then begin to manage that property.
- Third, the trustee will need to identify the other assets in the trust, such as bank accounts and investments. These will also need to be transferred into the trustee’s name.
- Fourth, the trustee must pay all of the debts and taxes required.
- Fifth, the trustee may be required to keep detailed accounting records of all the activity done in the management of the trust. There are certain instances in which this requirement can be waived, by including proper language in the trust document. However, accounting records for trusts are required by California law, and so it is rare that a waiver will be accepted. If this is something of interest to you, be sure to discuss your options with the legal team at Don Ho Law.
- Finally, the trustee must distribute the trust property to beneficiaries using the instructions provided in the trust. This can be done in the form of transfers of property, or through the establishment of sub-trusts for the benefit of individual beneficiaries.
What if a trustee fails to perform his or her duties properly?
If a trustee exceeds the administrative powers granted in the trust or by California law, he or she can be held liable for any loss or damage done to the trust estate. Additionally, a poorly administered trust can lead to costly and time-consuming litigation. Having an experienced attorney at your side will help you to avoid legal difficulties.
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