In our experience, it seems that many elderly parents pass away in January or February every year. Our Law Firm typically experiences a surge of telephone calls from adult children during those months requesting appointments. Most of the time the parent had a living trust, and the adult children are unclear about what to do.
It is best to seek the advice of a lawyer when there is a death – BEFORE taking any action. And BEFORE taking any action, the Trustee should have a checklist and action plan, so everything is completed correctly in the appropriate timeframe and manner. Here are a few things to keep in mind:
· Who is “in charge”? The Trustee may be someone other than you think.
· Carefully consider how many death certificates are needed. Many institutions inspect the original and return it to you. There is no need to over-order, but also remember it is often difficult to order additional death certificates.
· A taxpayer ID number (TIN) will likely need to be obtained for the decedent's Trust. This is done on-line through the IRS. This number is required to administer the Trust, and will be used in place of the decedent's social security number on the bank and brokerage accounts. Not sure how to obtain one or how to fill out the on-line form? A lawyer or your CPA can help.
· In our experience, we have found that it is not necessary to immediately notify banks of the death. There is a process which you must follow. If you act too early and improperly, you will have accounts unnecessarily frozen.
· There are certain “notice” requirements that a Trustee must follow regarding Trust beneficiaries. This is set forth in the California Probate Code, and includes providing a full copy of the trust you will be administering, which includes any amendments.
· Handle things by mail when possible – NOT telephone calls. Mail provides a written record of what was requested, and you will not be on hold for hours.
· There is a difference between Trust Assets and NON-Trust Assets – they are handled differently. Trust assets typically have the name of the Trust and the Trustee on the title. If you are the successor Trustee and the Trustee has died, you will need to change title to your name as Trustee of the Trust you are administering. This will require paperwork, the Trust itself, and a death certificate. Non-Trust assets typically designate beneficiaries (like IRA's, 401(k's), life insurance, annuities, etc.) Non-Trust assets are typically "collected" by the named beneficiary or beneficiaries.
· Do NOT put trust assets in your name when they should remain in the name of the trust. Do not co-mingle funds with your funds. If at all possible, DO NOT pay for expenses and bills with your credit card. Again, there is a process you must follow.
· Typical Trustee duties when a loved one has died include the following: understanding the terms of the Trust, notifying the taxing authorities, pensions, and beneficiaries, identifying and collecting the assets, estimating and paying taxes, settling bills and debt, selling real estate, and distributing the assets to the Trust beneficiaries, EXACTLY how it says in the Trust.
There are many other rules and requirements when winding up a loved one’s estate. It is best to understand your responsibilities and the process. Mistakes can be costly to fix – and some mistakes cannot be undone. If you are the named successor Trustee after a loved one's death, it is wise and prudent to have a consultation with an experienced attorney, and then chart your course of action.