What is a Trust Administration
At the death of the Grantor, a Revocable Trust becomes irrevocable and can no longer be amended or revoked. What follows is a legal process of administering the Trust and estate known as Trust Administration. The goal of a Trust Administration is to wind down the affairs of the Trust and estate by locating assets, filing and paying taxes, paying off creditors and distributing assets to the beneficiaries. If the Trust holds on to assets for minor children (or young adults), Trusts for the beneficiaries who are children are created at the end of the Trust Administration.
Why You Should Hire a Lawyer to Guide You Through a Trust Administration
Trustees must follow the terms laid out in the Trust and are accountable to the beneficiaries for their actions. Being a Trustee carries fiduciary duties and Trustees can be personally liable if they breach these duties. The Probate Code also identifies certain procedures that must be followed in order to protect the Trustee from ongoing liability.
While the person who passed away likely hired a lawyer to protect his or her interests to create the Trust, the Trustee must also a hire a lawyer (it can be the same lawyer if there is not a conflict) to protect the Trustee. Many people want to act as Trustee without the counsel of a lawyer, but this is typically not a prudent decision. Depending upon the complexity of the Trust, the assets and the beneficiaries, the lawyer’s involvement is minimal to extensive.
How Long Does a Trust Administration Take
Every Trust Administration begins with providing 120-Day Notices to the beneficiaries. Per the Probate Code, this is a legal notice letting the beneficiaries know that the Trust Administration has begun, and they have 120 Days in which to contest the Trust. After that they are barred from doing so. During this 4-month period, no distributions should be made. However, during that time, the Trustee is marshalling assets and paying debts. The trustee can sell assets and keep the proceeds in a Trust account.
At the end of the 120 days, the Trustee determines if the beneficiaries want to see an accounting. If so, the preparation of the accounting begins. If not, the beneficiaries sign a Waiver and Release of Accounting. If all beneficiaries inherit outright (meaning nothing is held in trust and distributed over time) and it’s a simple Trust Administration, it can last about 4-6 months. Others can last for years.
Why Hire Goldfarb & Luu
As with our estate planning and elder law services, we handle Trust Administrations differently too. First, we educate, counsel and hold the hands of our clients who are often Trustees for the first time. Second, we recognize that not all families are perfectly united and after a loved one has passed away, relationship can be tricky, if not really difficult.
We work hard to honor the person who passed away. We know that paying lawyers a lot of money was not the intended goal when he or she created a trust. Part of what can make a Trust Administration so expensive is when beneficiaries feel excluded from the process and then hire their own lawyers. When they hire a lawyer, it often triggers a lot more money going to the lawyers than is necessary.
When possible and if it’s a strategic consensus, one of our Goldfarb & Luu attorneys reaches out to each beneficiary to explain the process and what to expect. This basic courtesy has prevented many beneficiaries from hiring their own lawyer. This requires a few hours of extra work but often saves many thousands of dollars in the end.
In general, our clients appreciate our detailed, comprehensive and streamlined approach to Trust Administration. They feel supported and a sense of relief that they are doing what they are supposed to do and that we are there for them each step of the way, whether it’s simple or complicated.