How to Settle Revocable Trust After the Trustee’s Death
The process of settling a revocable trust after the trustee’s death is similar to probating an estate. The successor trustee performs duties much like those of a personal representative. However, there are a few key differences. First, the trust does not have to pay the decedent’s debts first, nor is it subject to full probate. Instead, the successor trustee will pay creditors through the decedent’s estate held outside the trust. Moreover, court proceedings are typically unnecessary.
An experienced document preparer can help you avoid making mistakes when settling a revocable trust. Get help from A People’s Choice today.
Step 1: Prepare & Review the Trust Documents
First, you must identify the trust successor trustee. You will find this information in the trust documents. Look through the documents for the section in which the trust maker designated an individual to handle these duties. The trust will refer to this person as successor trustee or alternate trustee. Once you locate the proper section, there are details that will provide specifics on the trust-maker’s choice for this important role. Sometimes, trust documents are challenging to read for people outside of the legal profession. If you are unsure about the identity of the successor trustee, get an expert to review the trust with you.
Step 2: Identify & Value Trust Assets
Once you identify the successor trustee, it will be their role to accept or decline to act as successor trustee and settle the estate. Just because an individual is appointed, does not mean they desire to serve and take on that responsibility. One of the roles of the successor trustee is to identify and value the assets of the trust. Hopefully, some of this information is in the trust documents. Look for a Schedule of Assets. Keep in mind, however, that this Schedule may not list nor include all trust assets. In other words, the successor trustee is responsible for investigating further. Also, a section in the trust documents will indicate who will receive assets upon the decedent’s death. After valuing the assets, the successor trustee will eventually be responsible for distributing them to the beneficiaries of the trust.
After the trustee identifies, locates, and values the assets in the trust, a meeting of the beneficiaries may be helpful. First, however, the successor trustee must mail notice to all recipients in the trust. Beneficiaries have the right to request a copy of the trust. Also, the successor trustee may want to provide beneficiaries copies of any appraisals. The beneficiaries can sign a document that indicates they consent to the distribution of the assets in the trust. These documents play a vital role in the successful settlement of the trust, so you must be confident they are written, distributed, and signed correctly.
Step 3: Document Delivery to Financial Institutions
Before you can make the distributions of the trust contents, you have a few visits to make. The successor trustee must take the trust document and the death certificate to all financial institutions that hold accounts in the trust’s name. Mishandle this part of the process and the trust will continue to exist because the assets will not be distributed. Once the financial institutions verify both documents, they will participate in the distribution of assets as necessary.
Step 4: Final Steps to Settle Revocable Trust
The trust continues to exist until all the assets have been distributed. However, once the asset distribution is complete, the successor trustee still has work to do. You must file a federal estate tax return, including values for the decedent’s assets. Sometimes a successor trustee will choose to use values from six months post-death instead of the values at death. Also, you will need to prepare new title documents before transferring real estate to a beneficiary. This part of the process tends to be complicated, and you probably will want to work with a professional document preparer such as A People’s Choice to make sure you avoid mistakes and get everything filed, registered, and adjusted correctly.
Do I Need an Attorney to Settle Revocable Trust?
As long as you can get the documents you need for the process, you probably can administer an estate without an attorney. The process is straightforward and usually, a successor trustee will not need to hire an attorney. Although this may be true, however, you will need an attorney if there is a trust contest. Sometimes heirs will contest trusts if they believe the trust was procured by fraud. They may also challenge the trust if its signing did not follow proper legal formalities. Sometimes, heirs and beneficiaries question whether the trust-maker was operating at full mental capacity. Sometimes heirs may claim improper influence or coercion on the trust-maker. If the trust remains uncontested, however, you probably will not require an attorney for this process.
At A People’s Choice, we can help you draft the documents you need to distribute and settle revocable trust assets. We can also help you create or amend your trust. Keep in mind that assets held outside a trust can subject the estate to probate. Talk to an experienced legal document preparer today for help with this important legal process. Contact us at 805-648-5540 today to get started.