The term “trustee” often conjures an image of a distinguished, silver-haired gentleman sharply dressed in a suit, sitting in a lawyer’s office with a briefcase filled with important papers. In reality, most trustees I meet with are children of clients who don jeans, a T-shirt and have a look of pure cluelessness. Their parents told them that they would be the trustee when their parents died, but other than that, the children have no idea what the next step is.
A trustee is a person (or persons) responsible for managing assets placed in a living trust. The trustee is usually the creator of the trust during his or her lifetime. Once the creator passes away, the successor trustee steps in to continue managing the assets and eventually ensure that they are distributed to the named beneficiaries.
Being a trustee can often be a stressful task because of the many duties and responsibilities associated with the appointment. In order to make the trustee’s job as easy as possible, consider the following:
Prepare a Personal Property Memorandum
When you create a living trust, you have the opportunity to choose who gets what after you’re gone. The typical beneficiary designation generally says something like this: “Upon my death, I want all of my assets to be distributed to my three children, equally.”
For the most part, children are happy when there is an equal distribution of assets. Everyone gets their share of the home; everyone gets their share of the money. However, there are certain circumstances that tend to cause disharmony within the family.
Interestingly enough, it is not things like, “Who gets the home?” or “Who gets the money?” that cause family fighting. Instead, disputes arise over who will inherit the sentimental items like Grandma’s wedding ring or Uncle Harry’s original paintings.
It is the trustee’s responsibility to distribute your assets. To prevent the trustee from having the stressful task of determining which person receives which asset of sentimental value, create a Personal Property Memorandum. Through this document, you specifically state which individual gets which asset (e.g., “My 2007 Toyota Camry shall go to my nephew, Garrett.”). The Personal Property Memorandum is used for tangible items such as jewelry, antiques, family heirlooms, etc. It is a great way to let your trustee know exactly what your wishes were and prevent any potential family fighting.
Fund All Assets
The primary purpose of creating a trust is to avoid probate. There’s nothing worse for a trustee than learning that assets need to be probated. It can take months to probate property … not to mention hefty legal fees. In the meantime, your trustee may have to deal with beneficiaries whining over how long it is taking for them to receive their inheritance. To prevent this from happening, you should make sure all of your assets are in the trust.
If you’re not sure whether your real property (your home, rental properties, vacation homes, etc.) is funded, ask your attorney. They will be able to do a quick title search to confirm that it is in the trust.
To check if your bank accounts are in trust, take a look at your statements. In the upper left-hand corner, it should reference a “Trust” or “TR.” If it only lists your name, it is probably not funded into the trust.
If you never funded certain assets into the trust or you’ve acquired new ones that also need funding, consult with your attorney to ensure that your trustee experiences a quick and painless administration of your trust.
Keep an Updated List of Assets
Think about whom you’ve named as your successor trustee. If you died right at this moment, would that person know what assets you own? Would he or she know about your savings account at Union bank or the Disney stock shares you purchased 20 years ago?
Upon your passing, your trustee will be responsible for marshaling in all of your assets and ensuring that they are distributed to your beneficiaries. It is important to write down a detailed and complete list of your assets so that your trustee knows exactly what he or she is dealing with. The list should be updated periodically (e.g., if you close your Chase checking account, that should be removed from the list) and should be kept in your trust binder for easy access.
Keep the Trust Easily Accessible
When I return a trust binder to a client, one of the questions I’m frequently asked is, “Where should I keep this?” Because there are so many important documents within your estate plan (the trust itself, Powers of Attorney, Pour-Over Will, etc.), the trust binder is quite big. So, where is the best place to keep it?
The knee-jerk reaction is to think of your safe deposit box. But what happens if you get into a car accident on a Sunday when the bank is closed? If your condition is critical and the hospital requires your Healthcare Power of Attorney, your family won’t be able to retrieve the contents of the safe deposit box until the next business day. Even if your accident occurs during the bank’s operating hours, family members may not be able to access it if they are not the registered owners.
The simpler alternative is to keep your trust binder in a place that is easily accessible. At home on the bookshelf, in a cabinet with other important documents or in the at-home safe are all great places to store your trust binder.
If you’re worried about theft, water or fire damage, or even just misplacing the binder, then you can always keep copies of your estate planning documents in your safe deposit box. Though not required by law, most attorneys will also keep duplicate originals of the trust at their office.
Regardless of where you choose to keep your trust binder, remember one thing: Always let your trustee know where it is located. If your trustee knows where the trust binder is stored and can easily access it, it will prevent unnecessary stress.
Staci Yamashita-Iida, Esq. is an Estate Planning attorney at Elder Law Services of California. She can be contacted at (310) 348-2995. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or JACL. The information presented does not constitute legal advice and should not be treated as such.