After the death of the Trustor of a living trust, or after the death of the surviving Trustor (if the revocable living trust is a joint trust), the following steps should be taken:
- Successor Trustee. Establish authority for dealing with the trust estate by determining the identity of the successor trustee, and that person’s right to act. Documentation for the successor trustee usually needs to be provided to third parties, such as banks, mutual funds, or brokerage companies.
- Protect Assets. Any tangible personal property or real property which is part of the trust estate needs to be made secure. Residential real property needs to be cared for, including management of utilities, maintenance of the grounds, and protecting contents. Occupancy of the residence by a third party should be considered.
- Trustee’s Duty to Inform Beneficiaries. Washington law requires that trustee’s make certain information available to trust beneficiaries. Generally speaking, a trustee must keep the beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for those beneficiaries to protect their interests. Specifically, a trustee should take the following steps:
- Upon the request of a beneficiary, the trustee must promptly furnish a copy of the trust agreement;
- Within a reasonable time after accepting a trusteeship, the trustee must notify all beneficiaries that he or she is serving as trustee of the trust and provide his or her address and telephone number;
- Within a reasonable time after the death of the trust’s creator (the “trustor”), the trustee must notify the beneficiaries: (i) of the trust’s existence, (ii) of the identity of the decedent, (iii) of the beneficiary’s right to request a copy of the trust agreement, and (iv) of the right to a trustee’s report (as described immediately below in paragraph 3.4);
- The trustee shall send a trustee report, at least annually and upon termination of the trust, to the beneficiaries who have request a report. The report must include a listing of trust property and liabilities, and must show the market values of trust assets, if feasible. The report must reflect all receipts and disbursements of the trust, including the source and amount of the trustee’s compensation. Upon a vacancy in a trusteeship (unless a co-trustee remains in office), a trustee report must be sent to the beneficiaries by the former trustee. A personal representative, conservator, or guardian may send the beneficiaries a trustee report on behalf of a deceased or financially incapable trustee.
- Inventory and Appraisal of Trust Assets. All of the assets comprising the trust estate should be inventoried and a fair market value for those assets established as of the date of the Trustor’s death.
- Probate Assets. Determine if there are titled assets outside of the trust (e.g., owned in the Trustor’s name) which require a probate. If so, coordinate with the personal representative of the decedent’s estate.
- Liabilities; Cash Flow Analysis. Establish the character and amount of unpaid bills and debts which are outstanding, and develop a cash flow analysis for the administration of the estate which will include paying expenses, liabilities, and taxes.
- Tax Returns. A qualified CPA should be employed to take care of the estate and trust returns as required. Under most circumstances, a federal taxpayer identification number must be obtained, for trust administration, banking, and tax reporting matters. Either your attorney or your CPA can assist you in obtaining this number.
- Taxes.The decedent’s final income tax return (both state and federal) needs to be taken care of by either the personal representative (if there is a probate estate) and if not, then by the trustee. In addition, it needs to be determined if a federal estate tax return or state inheritance tax return is required. Again, the personal representative would be responsible for such filings if there is a probate estate, and if not, then the trustee is responsible.
- Distribution of Trust Estate Assets. After payment of all expenses, debts, and reserve or payment for taxes, the trust estate can be distributed. If there is a significant tax question, either on the income tax or estate tax, the trustee should not complete the distribution of the trust estate without retaining sufficient reserves to cover any tax liability that may arise in the future. A distribution can be made even though there is a remaining tax question if the trustee is comfortable in knowing that the distributees of the trust estate will be in a position to reimburse the trust for any taxes found to be owing in the future.
- Protection From Theft. Unfortunately, the risk of identity theft does not conclude at death. Post death identity theft is on the rise. To protect against this risk, the trustee should take a copy of the Certification of Death to the local Department of Motor Vehicles. The trustee should also send a copy of the decedent’s Certificate of Death to each of the three credit reporting agencies. They are as follows:
Experian Equifax Information Services TransUnion NCAC Customer Disclosure Center, Trans Union Consumer Relations P.O. Box 9556 Allen, TX 75013 P.O. Box 740256, Atlanta, Georgia 30374 P.O. Box 2000, Chester, PA 19022-2000 (888) 397-3742 (800) 997-2493 (800) 888-4213
- Miscellaneous Matters.
- Death certificates should be obtained either from the funeral home or from the state agency. You will need an original death certificate for each state in which the decedent held real property. You may need additional originals to liquidate certain accounts. Because it is much easier to obtain death certificates at the time of death, it is probably better to overestimate your needs than to underestimate them.
- Social Security should be notified to stop payments and to arrange for eligible death benefits. Typically, the funeral director handles this task, but the trustee should ensure that this is the case.
- All insurance companies which issued policies on the life of the Trustor should be notified with a death certificate.
- The Trustor’s safety deposit box should be opened and inventoried.
- All credit cards should be cancelled.
- All mail should be forwarded to the successor trustee.
- Verify insurance policies for liability and fire.
USEFUL ADDRESSES AND PHONE NUMBERS
DEATH CERTIFICATES- Certified copies of the Death Certificate may be ordered from the mortuary or from the County Health Department in which death occurred. Certified copies are needed for: insurance, insured loans, tax returns, stocks or bonds in joint ownership, real property jointly owned, etc.
SOCIAL SECURITY- Your mortuary will file notify Social Security. If there is a surviving spouse or children under the age of 16, they are entitled to the Lump Sum Death Benefit. You must contact the local office.
INSURANCE- Notify insurance companies or local agents on policies held on the deceased. Check coverage on home, at place of employment, auto medical coverage, union, health and accident, life insurance, credit accounts (Sears, Wards, etc.) which might have death coverage, bank accounts, credit unions, etc.
VETERANS BENEFITS- Upon request, your mortuary can file for any entitled burial benefits, secure a flag and apply for a headstone. They will need a copy of the discharge (DD214). Additional benefits may be available if the death occurred in a VA facility or if death is service connected.
BANKS- Notify the bank of the death. Check for insurance on bank loans and installment contracts. Change the name on the accounts, government bonds and savings certificates. Check the Safety Deposit Box. It is useful to keep deceased’s name on a joint account for a few months.
HOME AND REAL PROPERTY- Take a certified copy of death certificate to the tax Assessor’s office in county where the property is located.
INTERNAL REVENUE SERVICE – 1-800-829-1040. The IRS is typically notified by filing the Trustor’s final tax return. The final return has some specific instructions, including attachment of a certified copy of the death certificate.
Disclaimer Notice: It is my intention that the comments, articles, and other information provided on this website are intended to provide you with general information which may be interesting and of value to you. You should not construe any of this information as legal advice or my opinion as it may relate to your specific circumstances. Please feel free to contact me directly if you would like to discuss your own situation and your estate, real property, or business planning needs.