When a loved one dies, you might be the one faced with the overwhelming responsibility of closing out the person’s life. There are many things to attend to — from planning the funeral and/or memorial service to closing bank accounts to notifying the post office, all of which require attention to detail — adding stress to what is already a pretty emotional time.
In this article, I am going to assume the dearly departed had created a living trust to keep his/her family from the high cost and delay of a probate proceeding. So, there is nothing in this article about the nightmare of probate. These instructions are intended for the “Successor Trustee.”
To cope, don’t try to handle everything yourself, i.e., “cut yourself some slack.” When close family members and friends ask what they can do to help, take advantage of the offer. In other words, delegate. The purpose of this article is to help the Successor Trustee get started in the right direction.
One of the first things you need to do is order death certificates. You can order them yourself from CDPH Vital Records, but it’s much easier to have your funeral director help you. But he’ll ask, “How many?” A good rule of thumb is to order one death certificate per financial account and one per real property, such as a home or condo.
Notify the local Social Security office. Typically, the funeral director will notify Social Security of your loved one’s death. If your loved one was receiving benefits, they must stop because overpayments will require complicated repayment. If the deceased has a surviving spouse or dependents, ask about his/her eligibility for increased personal benefits and a one-time payment of $255 to the survivor.
Another important step is to gather all financial documents. Financial documents include items such as the following: bank account statements, brokerage or security statements, life insurance policies, annuity statements, stock certificates and statements, pension documents and bills from credit cards, mortgages, hospital bills, etc.
Some of the financial accounts may have a “beneficiary” listed on the accounts. Depending on the type of asset, the beneficiary may get access to the account or benefit by simply filling out appropriate forms and providing a copy of the death certificate. If that’s the case, the trustee wouldn’t need to be involved — those accounts are not part of the trust.
It’s the responsibility of the trustee (i.e., you) to marshal the trust’s assets, keep them secure and distribute or administer them according to the terms of the trust. Hopefully, the Settlor (person who created the trust) kept a list of financial assets in his/her “Schedule of Assets” in his/her trust binder.
If there is no Schedule of Assets (or if there is and it’s not filled out), the trustee has the duty to use reasonable efforts to locate all trust accounts. You can look through the mail and also through desk drawers and filing cabinets. If you find a flat key on the decedent’s key ring, there’s a good chance there’s a safety deposit box containing important documents like life insurance policies.
Chances are, the dearly departed (i.e., the Settlor) has provided for “Trustee Fees.” You, as the trustee, may intend to waive such compensation. However, many trustees change their minds later after they find out how much time and energy is required. Therefore, it is highly advisable that the trustee keep a detailed log of the time spent “administering” the trust.
This log should include the trustee’s time spent arranging the funeral, getting the house ready for sale and meeting with CPA’s and attorneys. Unless expressly stated in the trust instrument, trustees are entitled to “reasonable compensation.” There is no harm in keeping track of your time, and should you decide to take fees in the future, it will come in handy.
Finally, contact an estate planning attorney to help you administer the trust. The trustee has numerous “statutory duties” owed to the beneficiaries, most of which the nonprofessional trustee has no idea. The trustee should choose the attorney. You do not need to contact the attorney who drafted the trust (that attorney may be retired or even dead). Getting recommendations from family or friends might be the best approach.
Remember, as trustee, you have the power to use trust assets to hire CPA’s and attorneys to help guide you through the trust administration process. The attorney will help you provide beneficiaries with proper notice requirements, an accounting and perhaps most importantly, a “release of liability” from the trust beneficiaries.
Judd Matsunaga is the founding attorney of Elder Law Services of California, a law firm that specializes in Medi-Cal Planning, Estate Planning and Probate. He can be contacted at (310) 348-2995 or firstname.lastname@example.org. 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 or tax advice and should not be treated as such.