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Dealing with the death of a loved one is never an easy time, and it can be made more difficult and overwhelming when you are responsible for that person’s trust. You are not required to begin handling a trust immediately, and waiting a few weeks is understandable. However, it is important that you take responsibility and go through the necessary steps to manage a living trust.

Living trusts are useful because they allow a different path than a will and do not require their loved ones to go through the probate process. Avoiding probate will reduce the time and costs of the court supervision it requires. This makes the process of passing down assets to family members and loved ones less involved.

Understanding What a Living Trust Is

A trust is a method of financial planning that is created to structure assets to be passed on to heirs or beneficiaries. If done well, a living trust can reduce tax liabilities in California and save the beneficiaries money on income and estate taxes. Living trusts often include properties to be passed on. After death, a living trust that was revocable, or able to be changed, becomes irrevocable. The trust is managed by a trustee, who administers the wishes of the trust’s creator after their death.

If you have the responsibility of managing a trust, there are certain legal steps you must be aware of when managing, distributing, and settling a trust. Each trust has its own unique challenges for managing it. Although there are important guidelines to follow, the length of time it takes to manage a living trust will depend on the size of the trust and the number of external complications.

Necessary Steps to Administering a Trust

Certain guidelines need to be followed when managing a trust after death, as well as any specific things asked of you in the trust. Once these steps have been taken, it is possible to dissolve the trust.

  1. Gather Important DocumentsDocuments needed include the trust document and the death certificate, including a certified version from a coroner’s office. There needs to be a death certificate for every asset in the trust, which includes properties, savings and bank accounts, and insurance policies. Each requires its own death certificate. You must also obtain titles for assets in the trust.

    This is also the time to read over and ensure that you are familiar with the trust document and other advanced estate planning documents. Reviewing the documents with a trust and estate attorney can ensure that you are taking the correct steps and understand the appropriate distribution of assets.

  2. Notice BeneficiariesYou must give beneficiaries of the trust and heirs to the creator of the trust written notice that trust administration has begun, under California law. The notice must list certain legal information to be considered legally sufficient. Under certain circumstances, notice should be given to additional parties.

    Throughout the process of administering the trust, be sure to keep accounting records that follow the state’s probate code. Beneficiaries are entitled to an account of transactions.

  3. Valuing AssetsAs trustee, you must inventory and value the assets and ensure that they are protected. If you fail to preserve trust assets, you may be held liable. A professional appraisal is necessary to determine the fair market value of the assets, in case they are sold. Assets in the trust need to be taken care of and invested properly and responsibly.
  4. Identifying and Paying Off DebtsAll debts or liabilities, including mortgage payments, credit card bills, legal fees, loans, and other debts, must be inventoried and paid off. If you fail to pay valid creditor claims, you may be held personally liable.
  5. File Necessary TaxesOnce a trustee is managing the debts, the final federal and state income tax returns need to be filed for the creator of the trust. Other necessary tax documents must also be filed on time. Failure to file these may lead to tax liabilities.
  6. Distribute the Trust AssetsFollow the instructions of the trust and distribute the assets to beneficiaries and heirs, in accordance with California law. Assets may be distributed instantly or over time. The trustee is responsible for those assets for as long as they are part of the trust.

    Contacting experts for certain aspects of the trust, such as real estate law, accounting, trust law, or investing, is often useful for trustees. You are still responsible for the work done when you delegate these aspects, so be sure you trust the experts helping you.

  7. Dissolving the TrustAfter the distribution of assets has been completed, the trust can be dissolved. It will no longer be a legal entity the trustee is responsible for, assuming all proper steps have been taken.

FAQs

Q: How do I open a living trust after death in California?

A: A living trust becomes irrevocable, or unchangeable, after the death of the person who created it. For a trust to be managed and the instructions to be followed, the trustee must take the proper steps to manage and begin to distribute, settle, and finally dissolve the trust.

Q: How does a trust work when someone dies in California?

A: A person’s living trust can be changed, but once the creator of the trust dies, it becomes irrevocable. Then, the trustee, or person responsible for managing the trust, must administer the assets in the trust according to the creator’s instructions to the beneficiaries.

Q: How do you transfer a property from a trust after death in California?

A: The trustee must file certain documents, such as an affidavit of death, a death certificate, and proof of property ownership. Then, the trustee can transfer or sell the property to the beneficiaries, in accordance with the trust’s instructions.

Q: Does a living trust need to be notarized in California?

A: Notarization of a trust document is not required in California, but it will authenticate it. All that state law requires is a signature for a valid living trust document. Finding a public notary is simple, and signing the document in front of a notary will make the trust further authenticated.

Reliable Trust and Estate Legal Counsel

If you are handling the responsibility of managing a trust, an estate planning and trust attorney can help you ensure you are not making any mistakes that may result in liability fees or penalties. Contact The Flanigan Law Group today for assistance in conducting trust management in accordance with the law.