Trust Settlement

There is nothing intuitive about settling a trust after the trust maker dies.  The process is tedious and requires locating countless documents, including: original estate planning documents, pour-over will, funeral and burial instructions, bank and brokerage statements, income tax returns, stock and bond certificates, life insurance policies, vehicle titles, utility bills, credit card bills, mortgages, and other important documents.  The trustee is then required to strictly follow the trust instructions regarding burial and funeral arrangements, distribution of personal effects, and specific bequests, among other responsibilities.  This is only the beginning of settling the trust.
 
Estate & Business Law Group is skilled at trust settlement and guides clients through this perplexing, tedious process. We work hard to make this experience as easy for you as possible.




Frequently Asked Questions
 















What happens at the initial administration meeting?   
At the initial administration meeting, your attorney will discuss a number of issues with your loved ones.  The first order of business is ensuring an ongoing income for your spouse and any dependent children.  A well-crafted trust document will always have arrangements for such immediate needs.  Family members will be especially relieved to avoid the expense and stress of probate court proceedings which can be time consuming and greatly delay access to the estate’s assets.  In contrast, a trust-based estate plan will offer your loved ones immediate access to your funds free of court interference.

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Is there anything else that needs to be addressed after my spouse and children are taken care of?
After reassuring a surviving spouse and children that they are taken care of, the attorney will review the steps that need to be taken to properly administer the estate.  Even with a trust, a certain amount of work is always needed to properly wrap up the estate.  Your attorney will discuss the following questions with your family members;
  • Who are the successor trustees?  What are their duties and what instructions do they need to carry out?
  • How will the successor trustees gain access to your financial information and assets to implement your estate plan?
  • How are life insurance claims submitted?
  • How are retirement plan benefits claimed and what decisions need to be made concerning options to roll them into a surviving spouse’s name or otherwise minimize distributions?
  • Does the estate woe any debts and how will they get paid?
  • How will income tax returns get prepared and filed for the final year of life?
  • How will the estate’s income tax returns get prepared and filed?
  • How will any necessary gift or estate tax returns be prepared and filed?
  • How will assets be distributed to the beneficiaries?
Your accountant, financial advisor, and insurance agent will help with some of these tasks.  Your attorney will work with a team of these professionals to set timetables, track deadlines and coordinate the process for your loved ones.
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How are tax issues handled?
One of the purposes of a properly prepared and funded living trust is to minimize taxes.  However, even with a trust, some taxes may be due.  After the death of a Trustmaker, the estate planning team of professionals will work together to see that tax returns are prepared an arrangements are made to pay proper taxes on personal, trust, and estate income.  Additionally, your attorney will work to fairly allocate income taxes to your beneficiaries on their inheritance, and try to minimize the tax consequences to your estate.

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How long does a trust administration take?
One of the purposes of a properly drafted and funded trust is to prevent the need for a probate proceeding, so that your loved ones can return to their everyday lives as soon as possible.  Even so, the length of time it will take to properly administer your trust will vary depending on several factors.  These factors include the size of the estate, whether the trust was fully funded, the type of assets that exist, and any requirement to pay taxes.  It will be your family, and not the courts, who will be able to settle the estate on their terms and at a time of their choosing.  Most trust administrations will take a fraction of the time needed to probate an estate.

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How do the costs of administrating a trust compare with probating a will?
The costs of administering a trust include attorney’s and accountant’s fees, and occasionally appraisal of assets.  Your estate planning attorney will work with your family to review the instructions given in your estate plan, identify your wishes, and advise and coordinate with the estate planning team on all legal issues including its administration.  This involves:
Ö     the collection and distribution of trust assets,
Ö     the exercise of legal disclaimer rights,
Ö     the preparation and filing of tax returns,
Ö     the handling of any guardianship issues,
Ö     the valuation of assets,
Ö     the collection of life insurance proceeds,
Ö     the handling of retirement benefits,
Ö     the payment of debts and administrative expenses, and
Ö     the transfer of assets to your beneficiaries or the trusts established for them.

While every case is unique, attorney’s fees for trust administration services typically average one and one half percent or less of estate assets.  Fees are usually based on the estate’s complexity and whether or not your trust was fully funded during your lifetime.

This compares very favorably with the cost of probating a will, which often consumes 3 to 7% of the total estate.  Additionally, the estate taxes on your assets, if you rely on a simple will instead of a trust, could cost your family hundreds of thousands of dollars in unnecessary estate taxes.  Although wills generally cost less than trusts to prepare initially, a comparative analysis of the two shows, that a trust-based plan will ultimately cost far less, while also simplifying the settlement process for your loved ones.

The probate process allows creditors to make claims for debts incurred during the deceased’s lifetime and allows the estate to pursue other legal actions pertaining to the decedent.  Notice of the probate proceeding must be given to all known creditors and to all creditors who might be known after careful investigation.  It must also be given to all relatives who may be legal hers, even if they are not included in the will.

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Are there any advantages of probate?
Advocates of probate argue that because probate proceedings are held in open court, it benefits potential heirs by providing everyone equal access to information contained in the probate record.  They also argue that court supervision of the probate process benefits society by providing an orderly way of wrapping up a decedent’s estate.  They further argue that additional benefits exist in that institutions dealing with probate court orders recognize them as binding, that rights of lost heirs are severed, that claims not timely filed can be legally barred, and that the estate may pursue any litigation deemed necessary.

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What are the disadvantages of probate?
The disadvantages of probating a will are many.  As stated above, the probate process is expensive, time consuming, and intrusive.  Court costs, attorney’s fees, personal representative fees, bonds, and accounting fees all add up.  The cost of probate is often between 3 to 8 % of the gross value of an estate (up to eight thousand dollars for a hundred thousand dollar estate).  If your estate is probated without a will, the costs of probate may be even greater.

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Can probate be avoided?
Yes, probate can be avoided by titling property with someone else in joint tenancy.  Such property will be transferred to the surviving joint tenant probate free.  Because joint tenancy property passes probate free, many individuals mistakenly believe they do not need further planning, if everything is titled in joint tenancy.  But joint tenancy can result in property passing to unintended heirs; risks unforeseen tax consequences, and can result in loss of assets to lawsuits and other misfortunes.

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Is there a better way to avoid probate?
Yes!  A simple and superior way of avoiding probate is to place your property in a trust, so that it passes probate free, while avoiding all the negative results of joint tenancy ownership.

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