Encino Trust Administration Lawyer

If you have recently lost a loved one who had a trust and you are unsure of your next steps, Barry Law Group can help. If the deceased person (“decedent”) left a trust, you may be a beneficiary, a creditor of the decedent or an heir (or other person who had a relationship with the decedent) who may believe you were wrongfully omitted from receiving assets from the trust. You may have been appointed a trustee and need guidance with administration of the trust.

As a trustee, certain procedures must be followed when administering the trust to ensure that the decedent’s affairs are properly settled, including proper distribution of the decedent’s trust and limiting the liability of the trustee. A trustee has fiduciary duties to the beneficiaries of the estate that can be complicated to understand and perform without guidance from a seasoned trust administration attorney. If you fall into any of these categories, Barry Law Group can advise you on your rights.

What Is Trust Administration?

Trust administration most commonly involves the process of administering a trust after the death of the person or persons who created the trust (the “settlor(s)” or trustor(s)”.) In the case of a trust, often the court does not need to be involved in the absence of a dispute or modifications to the trust. Indeed, one of the important purposes of establishing a trust is to avoid probate and court oversight. If a trust is jointly created by spouses, which is very common, there may be aspects of trust administration that need to occur when the first spouse dies. For instance, many trusts call for division of the trust estate into “sub-trusts” after the first spouse dies. Often, one “sub-trust” becomes irrevocable (meaning, it cannot be changed) and the other sub-trust remains revocable (subject to change) by the surviving spouse. A surviving spouse may need legal counsel to assist him or her divide the trust estate and fund the sub-trusts as required by the trust instrument.

There are misconceptions about trusts. The first is that they must be only for the extremely wealthy, which is not at all true. Anyone with assets should consider creating a trust to avoid probate and control how your assets will be distributed in the event of your incapacity or death. The second common myth is a trust administration is always complex. At Barry Law Group, we know how to interpret and explain even the most complicated trusts and estate plans to ensure that the decedent’s estate plan is carried out as intended and that the trustee is protected.

Is It Important to Hire An Attorney for Trust Administration?

A trustee should hire competent counsel upon the death or incapacity of the settlor or trustor, i.e., the person who established the trust. Hiring a competent and experienced attorney will ensure that the duties and responsibilities of the trustee are properly executed, that the trustee is protected and that the decedent’s wishes regarding his or her estate are followed as intended. The protection and transfer of trust assets, interpretation of the trust instrument, adherence to fiduciary duties, compliance with the trust’s and probate code’s requirements for accountings and keeping beneficiaries adequately informed are all important aspects of trust administration. In particular, a family member of the decedent who is appointed as successor trustee and is not familiar with the law of trust administration should hire an attorney to help guide him or her through the trust administration process.

Understanding Trust Administration

Trust administration can be accomplished without court supervision. Indeed, this is one of the primary purposes of establishing a trust. However, there are times when court supervision may be desirable or required, especially in the case of a disgruntled beneficiary. A beneficiary may initiate court proceedings if he, she or it is unhappy with how the trustee is administering the trust. A trustee may wish to initiate court proceedings to obtain court orders that approve of the trustee’s administration and limit or cutoff the liability of the trustee. There are also situations where a trustee must petition the court to have an asset transferred to the trust. If, for instance, the trustor intended to transfer real property into his or her trust, but died before he or she was able to make the transfer, the trustee may petition the court for an order deeming the real property a trust asset. This grounds and procedures for this type of petition may be found in Probate Code section 850, et seq., and is also known as a “Heggstad” petition.

Where court intervention is not necessary, trust administration may involve the following steps:

1. Marshalling (collecting) the trust assets for administration by the trustee. Where the decedent was the trustee of his or her trust until death, the trustee that takes over after death is typically called, a “successor trustee.” The successor trustee may be required to transfer the trust’s assets into the name of the successor trustee to allow the successor trustee to assert ownership and possession of those assets for further disposition, like sale or distribution. For instance, a successor trustee will typically file an “Affidavit of Death of Trustee” with the recorder’s office of the county where any trust real property is located. This document advises the public, lenders and potential buyers that the successor trustee has authority to deal with the real property.
2. A successor trustee of a revocable trust that became irrevocable upon the death of the trustor, must also advise heirs of the decedent and beneficiaries of the trust of the death of the trustor, where the trust is administered and provide or offer to provide a copy of the trust instrument. The requirements of this notice can be found in Probate Code section 16061.7. Importantly, this notice also advises the heirs and beneficiaries of a deadline to file a contest of the trust (“You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later.”) The deadline created by this notice, also called, a “Notification by Trustee,” prevents a contest after the deadline passes. Any person who believes he, she or it was wrongfully disinherited from the trust, received less than intended by the trustor, or disagrees with any other provision of the trust, may elect to file a trust contest, but cannot do so when the deadline to file a contest has passed. After the deadline passes, the trustee may administer the trust without the risk that a person will set aside the trust or its provisions. The notice is usually a simple, but necessary step, to trust administration.
3. Often, a trustee will be required, or asked by a beneficiary, to prepare an accounting of the trust. An accounting typically sets forth the assets of the trust, their value(s), income and expenses of the trust, including any trustee or legal fees, payments of debts, gains and losses on the sales of trust assets, distributions to beneficiaries and other information. A beneficiary may demand that the accounting conform to the requirements of the Probate Code (see, Probate Code sections 1060 – 1064.) A trustee who is unfamiliar with trust accountings should hire an experience trust administration attorney to assist the trustee to gather information for the accounting and prepare it.
4. Some trusts call for distribution of all assets outright to the beneficiaries upon the trustor’s death; other trusts may require administration that continues for months or years for the benefit of some or all of its beneficiaries. Some trusts require that assets are placed into “sub-trusts” created by the trust instrument. Eventually, however, assets are distributed either to sub-trusts, other entities or directly to the beneficiaries. Upon distribution, a trustee should obtain receipts from the beneficiaries that confirm the beneficiaries received the assets to which they were entitled under the trust.

Numerous other procedures and steps of trust administration may be required before the trust may be closed. That is why it is important for a trustee to retain legal counsel to ensure that a trust is properly administered for the benefit of the beneficiaries and that the liability of the trustee is limited.

Contact Our Encino Trust Administration Lawyers Today

Our Encino trust administration lawyers are here to help you understand your duties and rights and offer advice and assistance to ensure the administration of a trust proceeds smoothly. Connect with us today online or call for a consultation. We can discuss the best next steps for your particular case.