A trust is simply a legal entity that holds assets. If you are the trustee of an estate when the Grantor dies, it is your job to disburse the assets to the beneficiaries in the specified ways and times. This process may take several months or even years to accomplish depending on how complicated the trust is.
Types of Trusts
Trusts can continue indefinitely in order to care for a special needs person or to care for children who will inherit assets at later specified times. They can also be irrevocable living trusts, revocable living trusts, and testamentary trusts. No matter the type of trust, you, as trustee, will follow the dictates of the trust and disburse assets at the appointed times. Read on to learn more about how to settle a trust after someone dies.
You might be a family member, a financial advisor, family friend, or a financial institution such as a bank. No matter how you are connected to the family, your legal obligation is to act in the best interest of the beneficiaries.
Gather Information
In the first month or so, you gather financial information such as income statements, bills such as trash, cable, cleaning companies and become aware of any outstanding debts or income that needs to be accounted for. Keep a lookout on the mail and talk to the deceased’s lawyer about access to email accounts that may have bills that you need to see.
These organizational chores are just the beginning of your job as trustee, but Rome wasn’t built in a day and estates are not settled overnight. If anyone is pressuring you, calmly let them know that you are doing what you can to expedite the disposition of the assets, but that many details must be taken care of in the eyes of the law first.
Death Certificate
Your first duty as a trustee is to make sure that a death certificate is issued. If the funeral home does not issue death certificates, check with the hospital or the medical examiner about how to obtain copies. According to NC Med Board, “Under NC law, death certificates must be completed by a licensed physician or a physician assistant or nurse practitioner who has been specifically authorized by his or her supervising physician to certify deaths.”
You must also notify the state department register of deeds or make sure that they have received the death certificate from the hospital, medical examiner, or funeral home. However you obtain the death certificates, you will need at least 10 certified death certificates to verify facts with the different companies and agencies you will be working with.
The Will & Probate
If you are not the executor of the will, then you also must work closely with the executor who may need to distribute some of the assets into the trust you are managing. The executor may have the will or you may need to look through paperwork and find out if a lawyer has a copy of the will or if they have left one with a relative. Once you locate the will, file it with the probate court in your county. Without a will, the probate court will take charge of the proceedings, so it is imperative to provide the will to the court.
Notify State & Federal Authorities
Whether they were receiving social security payments or not, it is your duty to notify the Social Security Administration of the death, so that any payments can end and also to prevent any identity theft of their social security number. According to ssa.gov, “If the deceased was receiving Social Security benefits, you must return the benefit received for the month of death and any later months. Benefits received by check must be returned to Social Security as soon as possible. Do not cash any checks received for the month in which the person dies or later.”
Beneficiaries
Using the language drawn up in the trust documentation, identify who the beneficiaries are and make sure that they all know about the death. Most often, the beneficiaries are in contact, but sometimes a beneficiary has lost connection with the family and may not know about the death. It is your job to make sure that they hear the news. If any of the language of the trust is unclear, consult an attorney specializing in trust administration or estate planning services.
Taxpayer Identification Number
You’ll need to apply for a taxpayer identification number. You can call the IRS on their Business and Specialty Tax Line: (800) 829-4933 between 7 a.m. and 7 p.m. A representative will request identifying information from you to look up the trust’s EIN and confirm that you’re authorized to receive it. An EIN is a number issued by the IRS which functions like a Social Security Number for the Trust. Often the EIN is the Grantor’s social security number. You may later need to report the trust’s losses and gains to the IRS, so this step needs to be completed early on.
Trust Assets
Your next step is to look at the assets in the trust and get familiar with their worth. Trusts can include any type of asset: cash, securities, real estate, or life insurance policies. You will need to find copies of the latest statements and begin putting these accounts in your name as the trustee of the estate. This will require copies of the death certificate and proof that you are now the trustee. The sooner you can finish this part of the process, the sooner you can begin to understand the value of the assets. If there are assets such as jewelry in which the value is unclear, use an appraiser to make sure that your record keeping accurate.
Once you have a grasp of the assets in the trust, you will need to manage the investments. Sometimes investments are easy to manage, but other investments such as depreciating real estate or unstable securities may be risky and need expert attention. If you are unsure about how to value or manage any of the assets, seek the help of a lawyer skilled in estate planning and asset management.
Pay Debts
Once you understand the value of the assets and you have placed the accounts in your name as the trustee, you can pay debts such as lawyers, accountants, funeral homes, credit cards, utilities, and medical providers. You may or may not need to file a tax return for the trust. According to IRS.gov, “Trusts must file a Form 1041, U.S. Income Tax Return for Estates and Trusts, for each taxable year where the trust has $600 in income or the trust has a non-resident alien as a beneficiary.”
Information Overload
If you are struggling with organizing all of the financial information that you are gathering for the trust, invest in some financial software or consult a legal or financial advisor who can point you in the right direction. Expenses you incur while in the process of managing the estate are part of the expenses of the estate so don’t be timid about buying what you need to manage the estate well.
Find Help
Being a trustee can seem like a daunting task for someone who is not naturally organized or financially astute, but it is perfectly reasonable to need some help along the way. Attorneys who are knowledgeable about estate planning laws and asset management and distribution can really help you accomplish your duties as trustee. Schedule a consult to see if the attorney is a good fit. As long as you are making reasonable choices and remembering that your loyalty is to the beneficiaries, you will accomplish the duties of trustee with a sense of accomplishment for a job well done.