Encino Trust Administration AttorneySafeguarding Effective Trust Administration in California
Trust administration is one of the most overlooked parts of estate planning. Failure to properly administer a trust can result in unnecessary taxes, very large attorney fees, and lawsuits by beneficiaries against trustees. At Tisser Law Group, APC, we have the experience and comprehensive knowledge of state and federal laws to help administer your trust effectively. Our Encino trust administration lawyers work closely with clients like yourself throughout the entire process to ensure that your trust won’t cause any issues for your beneficiaries in the future.
If you are named to serve as a Trustee of someone’s trust, get in touch with our Encino firm today at (818) 226-9125.
How Do You Administer a Trust?
Trust administration refers to the process of a trustee’s management and distribution of trust property to beneficiaries at the time of the grantor’s death. During this time, there are many matters that must be addressed, some of which depend on the kind of trust that is being administered.
Some of these matters include:
- Having the successor trustee takes control of the trust and its assets.
- Notifying the trust’s beneficiaries and the decedent’s heirs that they are entitled to a copy of the trust.
- Identifying and collecting trust assets.
- Identifying what debts the decedent owed.
- Paying the decedent’s income taxes.
- Determining whether an estate tax return will need to be filed and whether estate taxes will be owed.
- Determining what tax planning might need to be done, such as avoiding property tax increases on real estate, the making of disclaimers and allocating generation-skipping tax exemption to trusts created as a result of the decedent’s death.
- Creating trusts for beneficiaries.
- Determining what assets are to be allocated to the beneficiaries.
- Distributing the assets to the beneficiaries.
California Trustee Duties
Every trust has a trustee responsible for properly carrying out their duties. These duties are called “fiduciary” duties, and the trustee must exercise the highest standard of care in carrying out these responsibilities.
In California, a trustee’s duties are derived from three sources: the trust document, the California Probate Code, and case law. The trustee’s actions must be in compliance with all of these.
Failure to meet this standard could result in the trustee being sued by the beneficiaries for breach of the trustee’s duties.
The duties discussed in this section apply to all trustees of all trusts, including the trustee of the Administrative Trust during its trust administration and the trustee of any trusts created for beneficiaries after distribution of the assets.
Some of the trustee’s responsibilities include:
- Managing the trust assets and distributing income and principal to beneficiaries
- Making sure that the trust assets are separate from other individual’s or the trustee’s personal assets
- Not using the asset for the trustee’s own benefit
- Treating all beneficiaries equally and without bias
- Making sure the trust assets are preserved. If invested, it should be in a conservative manner wherein there is reasonable growth with minimum risk
- Proper bookkeeping, or making sure all trust activities are accurately recorded and providing those reports to the beneficiaries at least annually
- Filing tax returns
- Reporting to the beneficiaries significant activities of the trust as the terms requires
If you have been appointed as someone’s Trustee, our Encino trust lawyers can answer all your questions and guide you through the process of administering the trust. Call Tisser Law Group, APC now at (818) 226-9125.
Ensuring Annual Trust Accountings Are Prepared Properly
California law requires that a trustee keep each beneficiary of the trust reasonably informed of the trust and its administration. The trustee must account annually to any beneficiary who is currently entitled to income or principal.
The Annual Trust Accounting is a document that must be presented in a certain format under California law in order to protect the trustee and start the period during which a beneficiary might file an action against the trustee for improper trust administration.
A trust accounting is prepared in a different format from a financial statement of the type prepared by an accountant. Therefore, if the trustee has an accountant prepare the trust accounting annually, the trust attorney should review it. Although preparing formal accountings will add to the expense of administration, the cost is payable from the trust, is tax-deductible, and will be spread among all the beneficiaries.
At Tisser Law Group, APC, we help trustees manage trusts properly by guiding them through every aspect of the trust administration. Call now for a consultation.
Important Information Included in a Trust Accounting Statement
Under California law, even those beneficiaries who are not currently entitled to income or principal may have a right to demand an accounting by the trustee. While the trustee may not currently expect that such a demand will ever be made by the remainder beneficiaries, the trustee cannot be certain that circumstances will not change.
In California, the annual accounting is to be prepared for the trust’s tax year which just ended and must include the following information:
- Receipts and disbursement statements of the principal and income during the last year
- Assets and liabilities statement of the trust
- The trustee’s compensation
- Any professionals or agents hired by the trustee, which should include the agent’s relationship to the trustee including their compensation
- A document stating the right of the recipient of the accounting to file a petition in court to obtain a court review of the account and acts of the trustee
- A document stating the terms of filing claims against the trustee for breach of trust
Find the Right Attorney for Your Trust Administration
Failure to get proper advice from an attorney through the trust administration process can open you up to personal liability. However, finding the right attorney can be frustrating. It is important to ensure that your trust administration lawyer is
- Board Certified in Probate, Estate Planning and Trust Law, as certified by the California’s Board of Legal Specialization
- Constantly up-to-date with the myriad of changes in the area of trust and estate law
- Specialized in and focused on the area of estate planning and trust law
At Tisser Law Group, APC, our probate and trust administration lawyers are well qualified to help you fulfill your trustee duties. We have the comprehensive understanding of estate and trust law needed to guide you through the administration process.
Give our Encino trusts attorney from Tisser Law Group, APC a call at (818) 226-9125 to receive the legal guidance that you need to properly manage a trust.