Centara Connection

Settling a Loved One’s Estate: Don’t Try This at Home!

Ryan Coulson, Estate Planning Attorney

One of the most difficult aspects of our job as estate planning attorneys is enduring the loss of a client. However, we find solace in the fact that we are able to carry out our clients’ ultimate wishes by assisting their successor trustees. Thus, we embrace the opportunity to guide your successor trustees with our trust administration services.

Many individuals believe that because a living revocable trust was established, there is little to be done to wrap up the estate after a loved has died. While it is true that the trust will be able to avoid fees of approximately 7% of the total gross estate, as well as the complications and sometimes a 2 year time period associated with probate, a trust is not self-operating. There are documents that need to be provided pursuant to both the trust and the law. Additionally, there are multiple fiduciary rules your successor trustee must comply with. Successor trustees who attempt to handle the affairs without the guidance of a professional such as an attorney, often leave themselves vulnerable to civil liability.

Unless otherwise indicated in the trust document, California Probate Code 106040(a) requires trustees to handle the trust estate with the standard of care, skill, and caution that a prudent person would use in an “enterprise of like character.” This standard requires a trustee make the trust assets productive while simultaneously maintaining their duty of impartiality by taking into account the needs of both the income and remainder beneficiaries.

Additionally, successor trustees have duties to account and furnish information to the trust beneficiaries under California Probate Code 16060 et seq. Such information includes a copy of the terms of the trust, a report of information regarding the estate’s assets and liabilities, and in some cases, an annual accounting. Trustees who fail to provide this information will be responsible for all damages, attorney fees, and costs caused by the failure.

Finally, unique tax planning opportunities exist with regard to assets that pass outside of the trust if they are conducted shortly after an individual’s passing. Such opportunities include stretch-out planning for 401(k), IRAs and other qualified funds, as well as capital gains techniques.

The above mentioned rules and opportunities give a small glimpse of the complexities involved in settling a trust estate. As a result, we strongly encourage those successor trustees to seek the advice of attorneys and other professionals when undertaking this task. Centara Legal Group is well versed in the laws and welcomes the opportunity to assist your successor trustees.

Centara Legal Group, APC
8880 Rio San Diego Drive, Suite 450
San Diego, CA 92108
(619) 400-1900
www.centaralegal.com
info@centaralegal.com