Our firm has nearly 60 years of experience handling the administration of Trusts, including all steps required under California law. This often includes the preparation of federal estate tax returns, trust funding (in life and following a death), post-mortem planning, qualified disclaimers, the allocation of the generation skipping exemption, trust litigation and Will contests.
Even when clients have a Trust that has been properly funded to avoid probate, a number of important matters must still be addressed at the death of the Trustor. We assist our clients with these matters.
For example, California law requires the trustee to send Notifications to the trust beneficiaries and to the decedent’s legal heirs within 60 days of a death. In addition, the decedent’s original Will, and any Codicils to the Will, must be deposited with the Clerk of the Superior Court in the county where the decedent resided, within 30 days of death.
The trustee must determine if any assets were held outside the trust, and if so, whether a probate proceeding of some type is necessary. Some assets, such as life insurance and pension assets, may pass by beneficiary designation, and those must also be addressed. Bank accounts and other assets might also pass under joint tenancy.
In addition, the trustee must determine the value of the decedent’s assets as of the date of death. Valuation is necessary for appropriate distribution to the trust beneficiaries. Valuation is also important in order to determine if a gift or estate tax return is required to be filed, and if any estate tax is due. Valuation is also important for income taxes, because it sets the new income tax basis for the assets transferred, as basis will be important for future gifts or sales.
The trustee may be required to file final income tax returns for the decedent, as well as fiduciary income tax returns for the trust. Our firm works with the trustee, and the estate’s accountant, to ensure proper reporting is completed.
For trusts that own California real property, the trustee must notify the County Assessor(s) of changes in ownership. An affidavit must be recorded to show the change of ownership (or change of control if the trustee died). While Proposition 13 usually results in an increase in property taxes at death, exclusions exist for transfers to spouses and children. The appropriate forms must be filed promptly with the Assessor in order to avoid property tax reassessment when property is transferred to spouses or children (and sometimes to grandchildren). The way real property is distributed from a Trust can cause a property tax reassessment. Our firm guides trustees through this process to help avoid triggering unnecessary taxes.
Finally, once the post-death administration is complete, the trustee will distribute the trust assets to individual beneficiaries or perhaps to trusts that continue over time. In appropriate cases, we assist the trustee with preparing a trust accounting for the beneficiaries, and with documenting the distribution of assets, sometimes through a distribution agreement, to avoid future uncertainty and possible disputes.
It is important for the trustee to perform the Trust administration duties in a timely manner, and to address these issues and others. Our attorneys’ years of experience can make the administration easier, more efficient and less expensive for trustees.