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Trust Settlement

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People often think that if they have a Revocable Living Trust, then the process of actually Settling their final affairs will be easy and won't require the help of an estate planning attorney. However, this is true for only a small number of trusts. Below, you will find a list of things to think about when deciding if you will need to hire an estate planning attorney to help you with settling your loved one's living trust.

1. Did the Trustor fund their revocable living trust?

In order for a revocable living trust to work as expected, you must make sure that it is entirely funded with the Trustor's assets before the Trustor dies.  If anything is left out of the trust and remains in the Trustor's individual name at the time of their death, then a probate administration may be necessary.  The only way to ensure that probate of the Trustor's estate will be avoided is for the Trustor to fully fund their revocable living trust and keep all beneficiary designations up to date before they die.


2. What was the Trustor’s marital status?

If your loved one's revocable living trust includes AB or ABC trust planning, then when the first spouse dies the surviving spouse will need to get together with an estate planning attorney to ensure that the A, B, and/or C trusts are adequately funded and any needed estate tax returns are organized and filed. When the surviving spouse passes, the successor trustee will need to meet with an estate planning attorney to understand the A, B, and/or C trusts as well as settle the surviving spouse's final affairs and their living trust.


3. Will the beneficiaries of the trust receive their inheritance outright or in distributions?

If the Trustor’s beneficiaries are going to receive their inheritance outright in its entirety, and no other specific matters need to be addressed by an estate planning attorney, then the successor trustee and beneficiaries should be able to work together to settle the trust with minor supervision of an attorney.  However, if one or more of the beneficiaries is going to receive their inheritance in a structured payment plan, then the successor trustee will have to work with an estate planning attorney to ​make sure that each beneficiary's trust is properly funded as well as to consider trust income tax returns and how each trust will be handled on a daily basis.


4. Does the estate owe estate taxes or inheritance taxes?

If the Trustor lived in or owned property in one of the many jurisdictions that collects state estate taxes or in one of the seven state that collects state inheritance taxes, then before the trust assets can be dispersed to the beneficiaries, the successor trustee will need to work with an estate planning attorney to make sure that all required estate/ inheritance tax returns are filed and all taxes paid.  If the successor trustee makes disbursements to the beneficiaries before the taxes are paid entirely, then the successor trustee might possibly be forced to pay the taxes out of their own pocket or assets.


5. What if the Trustor was a business owner?

If the Trustor owned a business and made an exit plan for what is going to happen to the business after they die, then the successor trustee will need to work with an estate planning attorney to execute the exit plan.  However, if the Trustor owned a business but didn't make an exit plan, then the successor trustee will need to meet with an estate planning attorney to handle the legal aspects of continuing, selling, or ceasing the business.


6. Will the beneficiaries be in conflict?

Even a cautiously designed and fully funded living trust can't rise above deep-rooted family conflict.  If the beneficiaries of a living trust do not see eye to eye with how the successor trustee is handling the allocation of the trust assets, then the successor trustee will need to hire an estate planning attorney to help out with settling the beneficiaries' discord.  Additionally, the beneficiaries may need to hire their own attorney(s) to assure that their shares in the trust administration are being represented and appropriately protected.


7. Are the beneficiaries named as beneficiaries of the Trustor’s retirement accounts?

If the Trustor's surviving spouse or other beneficiaries are named as the primary beneficiary (ies) of retirement accounts, such as the Trustor's IRA or 401(k), then the successor trustee will need the guidance of an estate planning attorney to make sure that the assets held by the IRA or 401(k) are correctly managed with regard to funding them and how to handle required minimum allocations and minimize any estate tax and income tax penalties.


8. Are specific individuals named as beneficiaries of a retirement account?

When a trust isn't named as the primary beneficiary of an IRA or 401(k) account, the beneficiaries might still need to seek help from an estate planning attorney to insure that the retirement assets are adequately handled with regard to mandatory minimum distributions and estate and income tax penalties.


What you should do…

Don't be convinced into thinking that your loved one's living trust will only take a few days or weeks to reconcile after they have died.  Hopefully your loved one has done everything in their power to make sure that their trust will function as it should be after their death, so that the trust can be settled with ease and away from the public eye and scrutiny of probate. 

The Flaig Law Firm is here to make the process understood, smooth and accurate.  It is best to hire legal counsel early in the process so that costly mistakes are not made.

For more information about trust settlements, please read our blog "6 Steps of Trust Settlement".


The hiring of a lawyer is an important decision that should not be based solely upon advertisements/articles. This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.



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About The Flaig Law Firm

We represent clients in Southern California communities, including, Los Angeles, Sherman Oaks, Encino, Van Nuys, Thousand Oaks, Westlake Village, Woodland Hills, Santa Monica, Riverside and San Diego; and throughout the San Fernando Valley, Los Angeles County, Orange County, San Bernardino County, Ventura County, Riverside County, San Diego County, San Francisco County, Alameda County, Sacramento County and Contra Costa County.

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