Hello, this is trusted the podcast. We’re talking about all things that involve being trustworthy or trusting others, especially other attorneys. I am your host, Blake Johnson, and, um, I am an estate planning attorney here in Las Vegas. We also practice in Salt Lake in St George, uh, pretty much anywhere in Utah, anywhere in Nevada and uh, also licensed in Arizona. Anyways, today, uh, have, uh, an exciting topic. Um, I’m talking about trust administration. What that means is this is what happens after the person who sets up the trust. We call it person at grand tour after they die Trust Attorney Las Vegas. And, um, everything seems to be focused on, um, you know, getting the trust in place. But no one really talks about what happens when the person dies. And so that’s what we’re gonna talk today and talk about today is what happens to the trust when the person who set it up, who was the original trustee dies.

How does that continue to be, um, uh, processed? How does, um, the trust, um, you know, get handled basically. So when you set up the trust, hopefully you’ve named a successor trustee. Uh, this is going to be the person who’s gonna take over when you pass away or let’s say if you become incapacitated. This would also be, um, the case. And so, um, what’s going to happen is, first thing we need to do is we need to get a death certificate, be able to be able to get that successor trustee in charge of the trust desert tickets. Typically depending on, uh, the county, uh, you know, usually within 10 business days we have a death certificate and, uh, then we need to draft an affidavit of successor trustee, the true successor trustee signs that it basically just says that, uh, the original trustee died and that the new person is accepting the role as trustee and agrees to honor the trust and to administer it in the way that the trust oral grantor, the person who set it up wanted it to be administered.

Now, um, they take that to, um, you know, all the banks, all the investment accounts. Um, we record it with accounting for every property that the trust owns. And what that does is it gets the successor trustees name on the trust on all of those accounts. So they have access to everything. Now, if the trust says that the, the everything is just to be sold and liquidated and divided equally amongst whoever, the Trust Attorney Las Vegas, the kids are pretty simple, they just do that. They sell everything. It all goes into one account, they write checks divided amongst everybody. Um, and then you would think that’s done. Unfortunately, that’s not the case. There’s also things that need to be done. Um, whether it’s a trust organist state, and that is you need to file the final income tax return for the person, um, who died and you have nine months to do that from the date of death.

And so what that income tax returns are gonna look like? It’s all the income. Those, it was, uh, assigned to that person from January one up until the date of death during that year. So if they died December 31st and they file it for the full year, if they died January 5th, then they only have the income for those five days. So it should be a pretty simple return. Um, but that is something that needs to be done as well Trust Attorney Las Vegas. Um, you know, there’s a lot of other stuff that needs to go on. We need to communicate with the beneficiaries, make sure we get ahold of everybody, track those, those people down. Um, you know, there’s things like, um, you know, making sure that there’s not any tax due from the trust itself is if the trust is ongoing and it’s continuing to generate income, is that income going to go flow through to the beneficiaries of the trust or does the trust itself pay that, the tax return.

And so we’ve gotta look at that to make sure that, um, that that’s going to be done correctly and, and file those returns if necessary. Um, a trustee may have, uh, may be compensated for all this work that they’re doing. Um, so the trust usually dictates what that fee is going to look like. If they don’t, you know, it can, they can either bill by the hour for whatever their normal hourly rate is, if they’re professional, um, or it can be a percentage of the estate, usually no more than what, like a bank or a trust company recharge. And usually they’re typically just under 1% of the trust value to be able to do that. So, um, you know, it is a lot of work. So that is why they’re able to be compensated. Now if it’s all family, typically they’re going to waive that cause you know, most people are good people and you know, want to make everything fair.

Um, but there is that work that it needs to be done. So is this all something you can handle on your own? That’s the next question. Well, yes, you can try to do all this stuff on your own and I’ve seen people do it successfully. Um, but you may want to come back and talk to the attorney who drafted the document or if you have a friend who’s an estate planning attorney that you have a good relationship, talk with them about it because, um, you know, successor trustee is a fiduciary duty so they can be personally liable if they don’t do handle things correctly. Um, if they co-mingle, you know Trust Attorney Las Vegas, trust assets with their personal assets, if they self deal, um, you know, if they do any of those things. So you want to make sure that the trustee is doing everything the right way.

There’s accountings that need to be done. Make sure to say, hey, hey, hey beneficiary, here’s how we got to the number that you got. And so you can document all their expenses, you know, when they have the receipts for it to show is actually a trust expense in those kinds of things. Um, to make sure it’s all done right. Um, other thing is sometimes, um, beneficiaries are receiving a large sum of money or, um, you know, they may be trustee of their own share. And so we want to have some education for those beneficiaries to go along, um, with the money that they’re getting so that they can do it the right way. They can maintain the asset protection that’s there if it, if it’s set up correctly. Um, you know, there’s also, you may want to have the successor trustee talk to an investment advisor if that trust can be around cause it was, it’s to be held in trust for the benefit of minor children and they’re not gonna be able to get it for a couple of years or until you want to invest the bulk of that money to, to grow and, and be more productive for them Trust Attorney Las Vegas.

You want a qualified financial advisor helping you do that. Um, you know, what, how do you terminate the trust when it’s done or terminate the will, uh, the estate, those are things that need to be done as well. Um, to make sure it’s done correctly. You can document. And so the trustee is not continuing to be liable for the trust moving forward. Um, making sure the distributions are done correctly, that they’re documented. And, and all of those things. Um, there’s also, uh, post-death tax planning, you know, certain assets maybe want to be, uh, taken or sold or just different things based on, on what’s, what the situation is. And then of course, tax minimization, uh, as part of that. So, you know, the trust administration can be very complicated. It’s definitely simpler cause we don’t have to go through court like the probate process, um, does, uh, but there still can be some ongoing service there Trust Attorney Las Vegas.

So you want it to have a, a, a, an attorney, an estate planning attorney help you with that. Now, if there is a trust company who’s listed to the successor trustee, hopefully they’re going to help you with that. Um, but if you’re a beneficiary, you may want to seek your own counsel to make sure that they’re following the trust correctly, even if it’s not a trust company. If you, if you have a trustee involved, it’s always a good idea to get a second opinion, make sure things are being done and handled correctly, especially with regards to trust. So, um, you know, those are kind of some, some pieces of advice that I have. Um, some things to look out for is if an estate planning attorney is requiring that you named them as the successor trustee, uh, that’s a big red flag that what they’re doing is they’re trying to guarantee themselves business when you die.

And also, you know, they may want to take your funds and, and charge that big fee or, you know, worst case scenario, we had an attorney who embezzled that money when he was successor trustee for all of his clients. So, um, you know, I’m not saying that they can’t be a, you should want to make sure you trust them and it’s your decision and to ask them if they would be willing to do it, not them forcing it on you. Also in the trust documents, make sure they’re not writing in there, that their family has to come back to you, um, to administer the estate or to administer the trust. Um, so, you know, there might be a different successor trustee, but they have to come back and use, um, the, the trust. And I’ve, I’ve seen attorneys get in trouble because they’ve put in there that the trustee will be criminally and civilly liable if they don’t come back, which is completely unethical and not true at all.

Uh, an attorney cannot force anyone to come back to them, uh, but it’s a scare tactic that they’re using in this wrong. So look out for those things when you’re looking at your trust to see how it’s going to be administered and ask the attorney about those things. And if you have any questions, please go get a second opinion. Most attorneys, estate attorneys will give you a free consultation to review that and make sure things are okay. So I think that’s enough today, uh, about, um, handling, uh, trust administration. Uh, I’m Blake Johnson. Hopefully you’ve found this helpful and look forward to talking to you next time.