When a trust is created as part of a comprehensive estate plan, a successor trustee is named to administer the estate after the death of one or both grantors. Although trust-based estate plans may avoid probate, all trusts must go through a trust administration phase to honor and carry out the terms of the trust.
At GM Group, our capable attorneys routinely assist clients in and around Santa Barbara County and throughout the state of California with the complicated trust administration process. We are committed to helping trustees fulfill their fiduciary duties according to the highest ethical standards and to protecting the rights of beneficiaries.
What is the role of a Trustee?
Trustees are considered to be fiduciaries which means that they are in a position of trust with the beneficiaries. In particular, trustees have a legal obligation to preserve the value of the assets when carrying out their duties. These duties include:
- Notifying beneficiaries and other parties of the grantor’s passing
- Inventorying and appraising trust property
- Transferring property into the trust
- Obtaining tax ID numbers
- Filing estate tax returns
- Trust accounting
- Distributing the assets to the beneficiaries
Depending on the size of the estate, fulfilling these responsibilities can be a daunting challenge. In trust-based estate plans with significant assets, for example, it may be necessary to distinguish between principal and income.
In one common arrangement, income may be distributed to one person at the time, while the principal is distributed to either that same beneficiary or to another person at a later date. Similarly, an inheriting spouse may receive income only while the principal is retained by the trust and can only be used in case of a medical or other emergency. In other arrangements, upon the death of a surviving spouse, the remaining principal may be divided among the grantor’s children or provided to a favorite charity.
Given these exigencies, administering a trust obviously requires a trustee to be competent and trustworthy. At the same time, the trust administration process can become complicated if conflicts arise among the beneficiaries. Our highly skilled legal team helps trustees navigate all of these complexities.
Preparation of Trust Accountings
As part of their duties, trustees are responsible for preparing fair and accurate accountings verifying that the assets are being properly managed. This requires maintaining records of beneficiary distributions and related activities and disclosing all of these actions to the beneficiaries. While trusts are typically administered independent of any judicial intervention, the court can order an accounting to receive judicial oversight and approval. This requires preparing a judicial accounting. In any event, a proper trust accounting must include the following information:
- A list of the receipts, disbursements, and distributions
- The trustee’s significant actions
- Services being provided to the beneficiaries
- Reasonable and necessary expenses incurred
- The compensation requested by the trustee
- An annual inventory of trust property
- Any other information the court requests
One common mistake that trustees make is having an accountant assist with the preparation of an accounting. However, accountants may not be familiar with the strict rules governing trust accountings and the related probate rules and law. By working with our knowledgeable attorneys, you can avoid errors or inaccuracies that can lead to disputes and the potential of a protracted and costly litigation.
GM Group has extensive experience helping clients prepare required accountings and related trust administration documents. By collaborating with a respected network of financial professionals, we ensure that all assets are titled properly and appropriate records and receipts are retained for tax purposes. We will work diligently to ensure that all state requirements are adhered to and that all beneficiaries and creditors receive proper trust accountings. Our objective is to make preparing accountings a transparent and stress-free process.
California Trust Administration Attorney
At GM Group, we work closely with trustees to help them fulfill their obligations while strictly adhering to California laws and regulations. We leverage our legal knowledge and skill to help trustees avoid making costly mistakes which could result in them being held legally liable for loss in the value of the trust assets, and from potentially having to pay significant financial penalties. We also represent beneficiaries to ensure that they receive any trust assets to which they are rightfully entitled.
Our guiding principle is to help our clients preserve the wealth they have gained over the course of a lifetime. At times, this requires protecting clients from creditor claims or representing them in disputes whether through litigation or arbitration. Dealing with the death of a loved is not easy, and can become even more stressful for those who are responsible for administering a trust. We will help to lift that burden and make sure that the interests of all parties are protected.
If you need assistance with establishing a trust-based estate plan, have been named as a trustee, or are the beneficiary of a trust, call our office today to set up a consultation or complete the contact form on our website.