Role of the Successor Trustee
Upon the death of an individual, there are certain tasks that must be undertaken by the family or the successor trustee if the individual died with a trust in place. These are outlined below:
A. First Steps
• Locate the Will and Trust Agreement and read them. These documents vary greatly so you cannot assume anything until you have thoroughly reviewed them.
• Help with the funeral arrangements. Determine whether there is a pre-planned or prepaid funeral arrangement in place.
• Hold a family meeting as soon as practical after the funeral. This can eliminate problems, misunderstandings and hurt feelings which could otherwise arise down the road.
• Confer with an attorney if necessary to determine the rights and responsibilities of all parties.
• Have an attorney on board if disagreements are surfacing.
B. Arrange for the Probate of the Will (if necessary)
If there is no trust, or if all assets have not been transferred into the trust, start a Probate proceeding.
• File a petition with the Probate Court
• Notify creditors
• Place the appropriate notice in the news
• Obtain Court authority over the property
C. Assemble the Inventory and Protect the Assets
• Locate the safety deposit box and inventory the contents
• Locate all of the decedent’s property including all real and personal property, stocks, bonds, IRA’s and other deferred accounts, checking and savings accounts
• Analyze all business interests: decide whether to continue, to liquidate, to sell or to arrange an interim management
• Prepare and file with the Probate Court an inventory of assets not transferred into the trust.
• Ascertain whether the decedent owned property in another state. If such property is not transferred into the trust, it will be necessary to start an ancillary proceeding in that state.
D. Handle the Financial Assets of the Decedent
• Send the appropriate notification to the concerned insurance companies
• Decide whether any jointly owned property is includable in the decedent’s gross estate for Federal Estate tax purposes.
• Collect all life insurance proceeds that are payable to the estate
• Review the decedent’s employment contracts and/or deferred compensation plans to learn whether payments are due to the estate
• Review the decedent’s employment benefits for items such as stock options, continued coverage for family members
E. Administration of the Trust
• Notify banks, investment brokers and others of your appointment as successor trustee (or personal representative as the case may be).
• Request the post office to forward the decedent’s (Trust’s) mail to you.
• Have appropriate assets appraised by a qualified appraiser
• Observe market and investment conditions concerning securities and keep a record of all transactions, income and expenses
• Pay all claims against the estate
• Determine whether the trustee is given the power to sell securities, depending on market conditions or the need for cash to pay taxes, bequests and costs.
• Keep beneficiaries and others with proper interests informed of the progress of the estate settlement
• File a claim for Social Security or Veteran’s benefits that may be due
• Collect income, accounts receivable and other funds owed to the decedent, the trust or the decedent’s estate
• Distribute the household and/or personal effects according to the Will or Trust Agreement provisions.
• Pay support for the surviving spouse and children as required by the Trust Agreement or as required by law
• With reference to real estate; inspect, supervise and sell if required to do so
• Make the appropriate partial distributions as the estate administration progresses.
F. Determine the Tax Liabilities
• Estimate the cash needed to pay for the taxes, legacies and other costs of the estate settlement
• File decedent’s income tax return
• File fiduciary tax returns on the estate and the trust during the administration period
• Find out if any credit is available against the Federal estate tax for assets taxed in another state
• See that the supplemental and supporting documents are filed with the return, such as copies of trusts established by the decedent or financial statements of the decedent’s businesses
• Ascertain lifetime gifts
• File state inheritance and estate tax returns as required
• Ascertain income tax basis of estate assets and furnish this information to the beneficiaries
• Determine whether any insurance policies on the decedent’s life, trusts in which he had an interest or over which he held any powers, are includable in his estate for tax purposes
• Determine the availability of certain relief provisions applicable to closely held business or farmland
• Determine whether administration costs are to be deducted against the Federal income or estate tax
• Decide whether any trusts made by the decedent during life or gifts made are includable in the taxable estate
• File the Federal estate tax return, arrange for valuation of the estate and determine whether the estate is to be valued as of the date of death or six months later.
• Secure Federal and State estate tax release so that distributions may be made as promptly as possible
G. Distribute the Trust and Make the Final Settlement
• In distributing the assets from the residuary estate, choose the date that will result in an income tax economy for the beneficiaries and the estate
• Ascertain if any assignments are on file, pay legacies and deliver specific bequests according to the Trust Agreement.
• Secure releases from the beneficiaries, and a discharge for the Court for the estate
• Prepare information for the final accounting.