A trust settlement checklist is a must-have if you have been named as successor trustee on a trust. After the death of an individual, their estate plan needs to be administered. This process is called post-mortem administration and is a series of tasks performed by a fiduciary named in the estate planning documents. The fiduciary of a trust is called a successor trustee.
Serving as the successor trustee of a trust is not a role to be taken lightly. Administration can be an arduous and time-intensive project even for a professional trustee, let alone an individual trustee who may not be familiar with the fiduciary duties and liabilities they are undertaking. If you have been named as successor trustee on a trust, the following checklist may serve as a guide of some of the duties you may perform in settling the trust and carrying out the wishes of the decedent.
16 Steps to Settle a Trust and Distribute Assets Outright to Beneficiaries
Locate estate planning and financial documents including, but not limited to, wills, trusts, powers of attorney, financial statements, and tax returns.
Obtain multiple certified copies of death certificates through funeral homes or mortuaries. You can also order death certificates through your state’s vital record office.
Obtain a Federal Tax Identification Number (TIN) through the IRS. Visit IRS.gov to apply for a TIN.
Contact an attorney to draft a formal acceptance of you accepting the role as trustee and file a notice to creditors.
Contact the decedent’s professional team (attorney, financial professionals, CPA) to notify them of the death of the decedent, your appointment as trustee, and discuss your role in the administration of the trust. The decedent’s professional team will be a valuable resource to help gather all the necessary documents to help you do your job. You will want to provide copies of the death certificates to the decedent’s professional team.
Consult with the decedent’s CPA to prepare the decedent’s final tax return and the trust tax return. Discuss with the CPA whether an estate tax needs to be filed.
Review the will or trust and identify the beneficiaries; make a list of their names, addresses, and contact information. Read the section of the trust about your powers and responsibilities.
Contact the post office to forward all mail to you as the successor trustee.
Cancel all services and utilities for the decedent. Pay any outstanding debts, including credit card bills.
Contact financial institutions to obtain access to the decedent’s bank and financial accounts. You will need to reregister bank accounts under your name as trustee.
Take an inventory of trust assets to determine which assets are titled in the trust and which assets may need to be administered as part of the decedent’s probate estate. Determine and update the cost basis of each asset at the date of death (step-up in basis).
Value any illiquid investments such as real estate, automobiles, art, business interests, etc.
Contact insurance companies and file any claims for life insurance benefits.
Obtain any information about retirement plans due to beneficiaries. Also, file any claims for social security benefits.
Begin distributions of any tangible personal property. Look to see if there is a list, Personal Property Memorandum, or specific instructions.
Distribute remaining assets to the beneficiaries per the trust document.
If you have any questions about the above trust settlement checklist, please email firstname.lastname@example.org or call 702-998-3700.
A corporate trustee is a bank or independent trust company that is licensed to act as trustee of a trust.
What is a Trustee?
A trustee is an individual or company who holds the legal title of trust assets for the benefit of the beneficiaries of a trust.
A trustee can serve today (current trustee) or in a future capacity (successor trustee) depending on the goals of the estate plan.
A trustee can serve alone or in a co-trustee capacity with other persons.
What is the Role of a Trustee?
The primary function of a trustee is to administer trust assets according to the grantor’s wishes while considering the interests of the beneficiaries of the trust.
A Trustee Wears Three Hats:
Administration Hat – Responsible for keeping the books and records of the trust and signing the tax returns.
Distribution Hat – Responsible for determining when an asset comes out of the trust and is distributed to a beneficiary.
Investment Hat – Responsible for managing the underlying investments of the trust. The trustee must ensure the trust assets are invested prudently and fit the overall objectives of the trust.
In a traditional trustee arrangement, one trustee wears all three hats. The trustee is responsible for the investments, distributions, and administration of the trust. Thankfully, over the last twenty-five years, many states have amended their laws to allow for the splitting of trustee duties, commonly referred to as a directed trust arrangement. This arrangement allows for the bifurcation or trifurcation of trustee duties giving trust grantors, beneficiaries, and their professional advisors more control over a client’s estate plan. Grantors can now decide which hats they want their trustee(s) to wear and what powers they retain. The grantor can select one sole trustee with full powers, or multiple trustees to wear different hats and retain only certain powers.
Why a Corporate Trustee Makes Sense?
If you are setting up an irrevocable trust while you are alive, you will need a trustee to act today. Some of the reasons you might set up an irrevocable trust are for asset protection, gifting, estate tax planning, income tax planning, charitable planning, opportunity shifting, etc. You will need to separate yourself from the assets and having a trustee in a top trust jurisdiction can be to your benefit for state income tax savings and asset protection.
There are many factors to consider if you have a revocable living trust and are looking for a successor trustee to take over in the event you become incapacitated or pass away. Please look at the following chart to determine whether a family member or a corporate trustee makes the most sense within your estate plan.
What are the Advantages of a Corporate Trustee over an Individual Trustee?
Do they have experience serving as a trustee? Do they know the responsibility & liability of serving? Do they want to serve?
Has Trust Officers trained in trust administration with expertise in record-keeping, tax and trust law.
Time / Resources
Do they have the time required to administer a trust? Do they have the appropriate resources?
Has a full-time dedicated staff and a network of estate planning professionals.
Has the discretion to charge a fee, usually drafted into the trust document, or determined by state statute.
Should have a published fee schedule on their website. Usually more expensive than an individual trustee.
Knowledge of the Family
May have more intimate knowledge of the grantor, his or her wishes, and the beneficiaries
May have less intimate knowledge of the grantor, his or her wishes, and the beneficiaries.
Impartiality / Objectivity
Biased. It is very difficult for individuals to not show biases during trust administration. Can they make difficult decisions without emotion, strictly based on the trust provisions?
Unbiased. They can only do what the trust document tells them to do. They are not affected by emotion and have the appropriate tools to make difficult decisions.
Location for state income taxes
Do they live in a state with a state income tax or a creditor friendly jurisdiction?
Does the corporate trustee reside in a favorable jurisdiction like Nevada for tax and creditor protection?
What is their age?
Corporate trustees continue in perpetuity.
Will they resign if asked by the beneficiaries?
Run a business and will typically resign if asked by the beneficiaries.
Regulated / Insured
Financially stable and carry insurance to protect the beneficiaries.