Once you have taken care of the funeral and the obituary you can then set-up a meeting with your legal team. At The Williams Law Firm helps you with the rest of the administration process to close the estate or wrap up the trust.
Although we are located in Delaware, we are licensed in Pennsylvania and are familiar with the Pennsylvania probate process and Pennsylvania Trust Administration. We also help clients with New Jersey Trust Administration.
The first step, after you call to make an appointment, will be to gather all of the documents. This will include the about ten death certificates, financial documents, estate planning documents and other relevant paperwork and electronic accounts.
If you have been named as a successor trustee for a loved one’s trust, your job will begin with gathering and determining the assets of the trust for an inventory. You will also need to find all of the documents, including previous trust instruments if the trust was amended or codicils if the Will was amended. While more significant assets, such as real estate and investment portfolios are not distributed soon after one’s death, usually tangibles (furniture, collectables, household items, cars, artwork, etc.) do not need to be held back for long periods of time if the manner of distribution is clear under the trust and there are plenty of other assets in the estate.
Usually in Delaware, there is an 8 months claims period, so assets are not typically distributed until after that time when in the case of married couple and the trust being administered is that of the second to die. Valuing objects may require appraisals. Often the beneficiaries “mouths are watering” over the tangibles. You will want to inventory the home safe and safe deposit boxes and inventory their contents, along with other valuable collections, such as stamp collections and coin collections. You may want to change the keys to the house and once assets are secure, look into having someone stay in the house to avoid losing the insurance. You will also want to secure the cars to make sure no one is driving them and possibly going to cause a liability. Look for a written list of tangibles saying “who is to get what” tangibles. While hand-written lists do not govern real estate and financial accounts, they may govern tangible when an estate planning document allows one making the trust to have a written list of tangible assets that name specific beneficiaries after the trust is executed. Do not underestimate issues that may surround tangibles because often the biggest disputes are over sentimental tangibles.
Usually one of the most significant assets is real property. This requires quite a bit of paperwork, locating the deeds to real property and determining the taxes, insurance, maintenance obligations are met. Plus if people are living on the property those occupants must also be addressed. Real estate that is out of state or out of the country may require special considerations, as should business interests held by the decedent. Sometimes property has unusual deed restrictions such as historic preservation. Most types of real estate may require it be appraised, whether this is farm land, commercial building lots or land locked forest land. Sometimes land has environmental contamination and required remediation. When foreign citizens or unsophisticated parties are beneficiaries, special considerations should be made with how you communicate with them, especially if they have a history of hostility or litigious predispositions.
Sometimes trusts provide for distribution of interests to beneficiaries as tenants in common. That may require a deed to change title into the name of the beneficiaries upon the conclusion of the estate with closing procedures similar to if a house is sold. Business interests may need to be split if the decedent had privately held stock or LLC member interests. Then the governing documents for the entities should also be considered.
In addition to real property assets, other assets, such as investment accounts, retirement accounts, life insurance, other trusts, pensions, employee benefits, government benefits, and savings accounts, must be addressed. We can write letters to insurance companies to notify them of the death. Usually from these assets, debts and taxes are paid. The successor trustee will also need to use money from the trust to pay all of debts of the deceased individual, such as utilities, mortgages, bank financing, credit cards and medical bills, plus the post-death expenses, such as trust administration fees for professionals, expenses and upkeep. Usually there is a statutory claims period where the funds should be held back in case a future claim is made for a debt of the decedent. There may also be assets in the form of lawsuits against someone who caused the death or other damages prior to death. Usually reconstructing someone’s business deals can be complicated, even when the decedent had meticulous business records. Sometimes the previous income tax returns can provide tracks in the sand to suggest where other assets may be if they were generating income. The trustee may also make decisions regarding investment strategy, such as whether to liquidate funds for cash distributions or to distribute investments in kind. Usually financial advisors are also involved in these decisions.
You should also look for evidence of loans to family members while the decedent was alive or evidence that gifts before death were intended as an advancement. Having a copy of previous gift tax returns can be helpful. In any event, looking for gifts before death may also lead to uncovering other assets which were put into joint accounts that should have been in convenience accounts. It may also uncover evidence of undue influence on the part of other caretakers or family members who may have taken advantage of an elderly person.
Final tax returns also need to be prepared and in some cases fiduciary income taxes also need to be prepared.
The successor trustee must determine who the beneficiaries are and how their interests are divided. This is set forth specifically in the trust. These specific beneficiaries must be located and then the remaining assets divided based on the terms of the trust. Once all of the assets have been divided and distributed, the trustee’s job is complete. Sometimes it is also good to hold back a certain amount depending on future contingencies. Some trusts will continue for years after death in order to allow beneficiaries to come of age, for incompetents, drug addicted beneficiaries, for spendthrifts, or complete requirements for their inheritance, all depending on the instructions contained in the trust document. Also sometimes there are gifts to charitable beneficiaries and the trust specifies from which sources those are to be paid to maximize the tax benefit to the trust or estate.
Also sometimes litigation can be unavoidable, so the successor trustee must be prepared and be cautious to avoid being negligent in the trust administration because the successor trustee is subject to a very high fiduciary duty to treat the trust assets as being kept for the benefit of the beneficiaries and not for the benefit of the trustee.
Also some large trusts require that the estate file federal and state estate tax returns or inheritance tax returns. We are also able to help with that part of the process. From reading the above, you can see that we are familiar with the Delaware Trust Administration process and would look forward to having the opportunity to help you with a smooth trust administration process and to address challenges as they arise.