Scenario: Dad died last year and mom died last month. Ok, not the most upbeat article ever, but certainly realistic and families must be ready for what to do now. For purposes of this article, we will assume that the parents had a properly drafted Living Trust and had placed their assets into the Trust prior to death. What now? When I say “Trust Settlement”, this means administering the Trust according to its directions now that mom and dad are deceased.
What do we do now, how do we distribute to beneficiaries, how do we change title to assets and how is it finally “closed” so that the Trust is no longer in existence? This article gives only a few brief statements of some of the things that the survivors should consider.
1. Do you need a lawyer? By law, you certainly do not need a lawyer to settle the Living Trust. In fact, the Successor Trustee(s) have all of the authority to settle the trust on their own. However, as we all know, most people who do not handle Living Trusts on a daily basis are not in a position to know all of the things that should/must be done to close out the Trust and have it Settled properly. The Flaig Law Firm strongly suggests that legal counsel is consulted and retained to assist through the process.
2. What type of a Trust is it? Gather all of the Trust documents. If it was a Married A Trust, Married A/B trust, Trust with a Q-Tip? In order to properly settle the estate, we will want to know exactly what kind of trust it is as they determine different ways to have it settled.
3. Who are the parties to the Trust? It is important to know who the “players” are in the trust. This primarily includes the Successor Trustee and beneficiaries. However, it can also mean financial advisors, CPAs and attorneys should the Trustors have included them in the trust to assist in its administration.
4. Gather Documents. Here is a non-inclusive list of documents that will need to be collected in order to facilitate the settlement of the trust:
- Statement for all bank and financial institutions
- Statement for all IRA, 401k, 403b, and any other retirement accounts
- Copy of all stock certificates
- Copy of all Bonds
- Copy of the most recent appraisal and/or tax report for all real estate and/or mineral interests and/or time shares.
- Copy of mortgage statement and obtain a written statement of the balance owed as of the date of death.
- Copy of the statement showing the balance owed on other debts
- An IRS Form 712 for each life insurance and annuity policy for the deceased.
- Year, make, model, special equipment, and mileage of all vehicles, boats and aircraft.
- List of all partnerships/corporations and their appraised value.
- Copy of all notes receivable and the balance owed as of date of death.
- Value of personal property.
*This list is not comprehensive, but gives a good idea of where to start.
5. Order Death Certificates. I would recommend ordering around 10-12 death certificates. They will be needed by many of the financial institutions as well as in dealing with any real property in the Trust. They will also need to be sent to credit card companies and the SSA.
6. Notices. Beneficiaries, creditors, SSA, credit reporting bureaus, etc need to be notified in writing.
7. Distribution. There are many things to be done, paid, noticed, etc., prior to any distribution being made to beneficiaries. Additionally, it is important that the Successor Trustee keep an exact accounting of all money going in and out of the Trust.
The last thing your mom and dad would want after their death is for problems to happen to their estate based upon mistakes by the Successor Trustee(s). As such, it may prove to be helpful to have a professional assist you in walking through the process.
February 2016 by Donald W. Flaig, Esq.