When a person dies, the successor trustee must fulfill specific duties and obligations. The trust document’s terms mandate some; others are required under California or federal tax law.
For example, many trusts require a trustee to account annually for the trust’s beneficiaries. If you are a new or current trustee, you must know the specific accounting requirements and how they apply to your trust.
The Trustee’s Duties
Under the rule of trust administration in California, a trustee has several duties. These include executing the terms of the trust and meeting any legal obligations that apply to the trust.
A trustee must also follow the rules of impartiality and avoid conflicts of interest. This duty is essential where a trustee may be one of the beneficiaries.
If a trustee has a conflict of interest, it can harm the trust or its beneficiaries. It can even lead to self-dealing and breaching the trustee’s fiduciary duty of loyalty (California Probate Code section 16002).
Another fundamental duty is to provide accountings to heirs or beneficiaries. It is done in most cases every year unless the trust document waives it or there are specific exceptions.
In addition, a trustee has to protect the trust’s assets. It includes ensuring the trust’s property is kept separate from other assets. It is crucial if the trust has a variety of assets, such as cash and real estate.
As a result of these duties, trustees are often under a lot of pressure to complete their work on time. Having the help of an experienced lawyer can make this task much more manageable.
Notices to Beneficiaries
Under the rule of trust administration in California, a trustee must notify all beneficiaries and heirs at law immediately after becoming a trustee or when a trust becomes irrevocable. This notice is intended to warn them about the faith’s irrevocability and inform them that they can receive a copy of the trust document upon request.
The notice must also include a warning that if the recipient contests the trust, they must do so within 120 days of receiving the message. It is a crucial timeframe because it allows anyone who wants to challenge the terms of the trust a chance to do so.
Aside from being a legal requirement, this notice is good practice and should help to set the tone for a beneficial relationship between you as a trustee and your beneficiaries. It should also give them a chance to ask questions and complain about your conduct in the administration of their trusts.
Although it’s rare for a beneficiary to go to court and challenge the validity of a trust, it can happen if they don’t receive the proper notice. It is especially true for contingent beneficiaries, who may not receive any inheritance until later or might die before you get to them.
Notices to Creditors
As the trustee of an estate, your responsibilities are to protect assets and property and distribute it to beneficiaries as agreed in the trust document. It involves taking an inventory, assessing assets, managing natural properties, filing tax returns and liabilities, and maintaining proper accountings of trust transactions.
You must notify all heirs, beneficiaries, and creditors in the decedent’s estate in California. While this may seem unnecessary, it is crucial to do as the law requires to ensure the heirs and beneficiaries get all the information they need to understand and participate in the probate proceedings.
You must also notify the Department of Health Services if the deceased received Medi-Cal healthcare benefits or was the surviving spouse of someone who did. It ensures that the decedent’s healthcare benefits are not subject to reimbursement claims from the State of California.
If the decedent had any outstanding debts, you must notify each known creditor of your appointment as the estate executor and your intent to administer the estate. This public notification is published in the local newspaper and alerts all creditors to your intentions.
We recommend consulting with a qualified probate attorney if you are still determining whether a specific creditor is required to receive this notice or if your news needs to be more detailed. You can download forms through Atticus Probate & Estate Settlement software or hire a lawyer locally in California to help navigate the probate process.
Final Accounts
Under the rule of trust administration in California, final accounts are a required part of any estate plan. It is especially true when the trust in question involves a substantial amount of money or property. It is also necessary to clearly understand what is owed to whom and when.
An appropriately crafted final account is the best way to ensure no one gets left out of the loop regarding the trust assets. It should be a complete list of all the trust assets, including cash in hand and bank accounts and those owing to creditors.
You should also provide a complete accounting of the income and expenses that have been paid and incurred by the trustee to ensure all parties involved have the most accurate understanding of the financial health of the trust at any given time. It may require the assistance of a professional, such as an experienced trusts and estates attorney or paralegal.
The best approach is to analyze all the assets thoroughly and outlays produced using the most recent technology and computer software. Once you have all the information, you can easily prepare a report for your beneficiaries and distribute the appropriate amounts.
