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Trust Administration California - What Is | Checklist Guidelines

Trust Administration

What is Trust Administration

When the grantor departs, the trust administration begins. As a trustee, the grantor has bestowed you with their estate to manage and distribute it per their requirements. Trust administration implements the Trust per the law, per the grantor’s wishes, and the Trust’s terms.

Practice Area: Trust Administration

California Counties: Orange County, Los Angeles

Serving California Residents: Newport Beach, Huntington Beach, Irvine, Laguna Beach, Costa Mesa, Mission Viejo, Fountain Valley, San Juan Capistrano, Dana Point, Laguna Niguel, Yorba Linda, San Clemente, Laguna Hills, Coto De Caza, Tustin, Seal Beach, Westminster, Garden Grove, Santa Ana, Anaheim, Stanton, Rancho Santa Margarita, Rancho Mission Viejo, Placentia, Orange, Villa Park and surrounding cities.

Guide to Trust Administration


What is Trust administration? 

Trust administration manages the assets in a trust according to the Trust’s terms to benefit the heirs and beneficiaries following the grantor’s death. Trust administration is a multi-step process that involves mountainous paperwork and dealings with courts. Working with a trust attorney can be instrumental in streamlining the whole process.

Trust administration processes and procedures revolve around the following:

· Communicating about the Trust and its terms to the named beneficiaries

· Filing the Trust and filing taxes

· Distributing the estate to the enlisted beneficiaries per the grantor’s

· Protecting the assets in the Trust

First off, give notice.

The California probate code requires that trust administrators file, within 30 days after the death, the grantor’s will and death certificate to a probate court.

Following that, all beneficiaries and heirs should be informed within 60 days, the details of the Trust, including the Trustee’s name and address. Following the notices, California law allows for 120 days for the beneficiaries to contest the terms of the Trust. After the expiry of that period, beneficiaries may no longer be able to file a contest.

Please note:

*If a beneficiary files a contest and the courts agree that the Trust is invalid, the Trust is legally repealed, and the intestate laws distribute the assets.

*If the courts deny the claim that the Trust is invalid, the trust administrator manages and distributes the assets per the stipulated terms.

*Trust administrators should work with a trust administration attorney, especially when a beneficiary files a contest.

Then handle real estate.

If a contest is not filed within the period, the beneficiary may then surrender his or her ability to do the filling. The administrator then goes on vest title in the Trustee for the Trustee’s seamless administration per the grantor’s last wishes.

An essential step in the process is filing a notice of the grantor’s death with the county assessor’s office. Notifying should happen not more than 150 days from the grantor’s death, or else could legally invalidate the change of the real property’s title from the deceased grantor to the Trustee could be legally invalidated.

Initiating the change of title can be a lengthy procedure. It involves filling out a change of ownership forms and filing affidavits. If the property’s value or type of Trust qualifies for estate tax exemption, you should attach a completed exemption form. A trust administration attorney can help you through these steps.

Compile other remaining assets

After transferring the real estate title to the Trust, the administrator should then identify other assets in the grantor’s estate-these range from investment accounts, second homes, and bank accounts. If any of these assets are not listed in the Trust, that may necessitate probate.

The property consolidation process establishes what the grantor planned in the Trust and will and what he/she left out. Suppose the grantor left a pour-over will (a will that allows every asset to be automatically transferred into a trust). In that case, California laws require the will to be probated before the assets get transferred into the Trust.

Next, appraise assets.

After you take inventory of all assets in the decedent’s estate, the next critical step is appraising them. An appraisal establishes the current value for proper distribution and tax purposes. Most likely, the terms of the trust outline the percentage distributions per the will of the decedent. You should accurately account for all the assets for rightful distribution.

Settling the decedent’s debts and liabilities is, no doubt, a critical part of the process. You should notify the creditors, for example, credit card companies, that the grantor has died so they can stop charging interest on the amount owed.

You should send a similar notice to the credit card report agencies (Experian, Equifax, and Transunion). The Trustee should inform them that the person has died and that his/her social security number or name should not be used by anyone to obtain new credit.

Regarding irrevocable trusts, the assets are no longer a part of the grantor’s estate. But that’s not to say that creditors won’t try to come after the Trust. A trust attorney can help to shore up legal protections for the assets in the Trust.

Also, file taxes per the deadlines.

A critical part of executing a trust is filing taxes. As a trust administrator, you are required to find your grantor’s tax identification number to pay owed taxes on the assets in the Trust. Reports should be filed to the IRS before the transfer.

Taxes are complicated, and they have deadlines. Where estate tax is owed to the IRS, taxes should be filed within nine months of the grantors passing. The Trust might also owe income taxes. A trust administration attorney experienced in tax matters can help in this process.

Lastly, distribute and report

After notifying the beneficiaries, the courts, the creditors, and the taxman of the grantor’s death and handling all the paperwork and procedures required, the final step in the process is asset management and distribution. The distribution is done within the premises of the law, of the grantor’s last wishes, and the given type of trust requirements. 

The trust management should be done per California trust accounting requirements: You are legally required to annually account to beneficiaries who are entitled to the distributions of income and principal in the Trust’s lifespan. Strengthening the accounting function and working with a lawyer can protect you from lawsuits by unhappy beneficiaries.

Keep a record of all monies used in:

· Handling the decedent’s final affairs, for instance, lawyer fees and your administration fees

 · Deposits and disbursements to beneficiaries

You should manage and distribute assets in the Trust in line with the terms of the Trust. That may involve setting up a new trust to hold the funds for minors or special needs beneficiaries. 

The above is an oversimplification of the trust administration process. In practice, the process is considerably complicated and lengthier-partner up with a trust lawyer to speed things up and achieve full compliance and asset protection.

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