Directions for the Surviving or Successor Trustee and Executor
This article has two sets of instructions for the Trustee named in your trust document and the Executor named in the pour over will.
The first set of instructions is called "Actions Upon Death or Incapacity." It is a general checklist of actions to take in the event of the death or mental disability of a Trustor. Because this is often a time of great stress on the family, it's helpful to have a checklist to make certain everything is looked after.
The second set of instructions is called "Trustee and Executor Duties" is designed to give the people named as Trustees and Executors a general overview of their duties. This becomes particularly important if both spouses are deceased or unable to manage their financial affairs. Or yourself if you are single.
The Successor Trustees who step in and assume responsibility for overseeing the management and distribution of the estate usually will need guidance on their duties. To this end, one of their first acts should be to call our office to schedule an appointment, at no charge. During this meeting, we will help them quickly become oriented to the responsibilities of their new position, we will answer their questions and, in short, we will be sure they know the steps they'll need to take.
Actions Upon Death or Incapacity
Included below is a brief list of the actions which the surviving spouse (or another person if you're single) and your Executor and Trustee, if different, should take immediately upon your death. (Many of these actions may similarly be required in the event of your incapacity). This is not intended as an exhaustive or detailed explanation of all actions which should be taken. Rather, it is for use as a checklist to help your appointed representatives step in and handle as expeditiously as possible those items which demand immediate attention. For a discussion of their longer term responsibilities and duties, please see the section entitled "Trustee and Executor Duties".
Recommended Actions Upon Death or Incapacity
1. If you are alone, telephone a friend who can spend the next few hours with you. Shock and trauma can take unexpected forms.
2. Notify a funeral director and clergy, and make an appointment to discuss funeral arrangements. Consult the "Location List" and the "Estate Planning Letter" sections in your Portfolio for the names and phone numbers of the appropriate parties and any special requests of the decedent. Request several copies of decedent's death certificate, which you'll need for his or her employer, life insurance companies, and/or decedent's attorney for legal procedures.
3. Contact by phone and notify the immediate family, close friends, business colleagues and employer (see "Location List" section for persons to contact).
4. Arrange for care for members of the immediate family, including appropriate child care, having people at the decedent's house, etc.
5. Locate the family's important papers. Consult the "Location List" section in your Portfolio. Gather as many of the decedent's papers as possible, and continue to do so for the next few weeks.
6. Notify the attorney who will be handling the decedent's affairs. Make an appointment immediately because a tax return may be due within nine (9) months of death. This meeting is important to review decedent's estate planning documents and to discuss state and federal death taxes that may be payable. The attorney will also determine the extent to which it is necessary or advisable to open a probate estate. (In the event of incapacity, the attorney may suggest additional steps which should be taken for estate planning purposes, particularly if death is imminent.)
7. Notify the decedent's financial counselor. Decisions may need to be made regarding repositioning financial assets and tax planning. The financial counselor may also be able to assist you with several of the items below.
8. Telephone decedent's employee benefits office with the following information: name, Social Security number, date of death (or incapacity); whether the death (or incapacity) was due to accident or illness; and your name and address. The company can begin to process benefits immediately.
9. If decedent was eligible for Medicaid, notify the local program office and provide the same information as in number 8.
10. Notify life, accident or disability insurers of decedent's death or disability. Give the same information as in number 8, and ask what further information is needed to begin processing your claim. Ask which payment option decedent had elected, and select another option if you would so prefer. If there is no payment option, you will be paid in a lump sum.
11. Notify your Social Security office of the death. Claims may be expedited if you go in person to the nearest office to sign a claim for survivor's benefits. Look for the address under U.S. Government in the phone book.
12. If you need emergency cash before insurance claims are paid, a cash advance may be available from life insurance benefits to which you are entitled.
13. If decedent was ever in the military service, notify the Veterans' Administration. You may be eligible for death or disability benefits.
14. Record in a small ledger all money you or the immediate family spends. These figures may be needed for tax returns.
15. Remember that you are in a highly emotional state. Avoid entering contracts for anything, and avoid spending or lending large sums of money. Consult the section of the Portfolio entitled "Other Documents" before proceeding further.
Trustee and Executor Duties
The following is a brief overview of the responsibilities and duties of your appointed Trustee and Executor. It is intended as a general guide only and your representatives should consult with the Law Offices of Joel A. Bernstein immediately upon taking over, in order to assure that they comply with all legal requirements as well as properly carry out the directions given by you in your Living Trust, Wills and other estate planning documents.
In the case of married couples, they generally serve as Co-Trustees of their Living Trusts in most cases. During their joint lifetimes, and assuming they are able to act, they will serve as Trustees of the Living Trust. Generally, a successor Trustee will step in only in the event that one or both of the spouses becomes incapacitated or dies. Consult the Living Trust for the order of succession of Trustees and the determination of when it is necessary for a successor Trustee to act.
These instructions should be consulted in conjunction with the other document in this section called "Actions Upon Death or Incapacity."
In general, all Trustees and Executors (referred to collectively hereafter as "representatives") face similar duties and responsibilities, regardless of the size of an estate. All steps in the administration of the estate are more or less directed toward three goals:
1. Collection and management of assets;
2 Payment of debts, taxes and expenses; and
3. Distribution of the balance of the estate assets to the named beneficiaries
Collection and Management of Assets
The first duty of a representative is to protect and preserve the estate assets. The representative should attempt to put together an inventory of all assets and their values as of the date of death. Refer to the section of the Portfolio entitled "Trust Property." This will indicate to the Trustee those properties that are already in the Trust name and subject to its control. The "Location List" section may help identify other assets that have not yet been placed in the Trust and therefore may be subject to the jurisdiction of the probate court and the Executor.
The next step is for both the Executor and Trustee to check the powers that they will have over property by referring to the Will and the Trust documents. If there are any questions as to the extent of the representative's powers, please contact our office.
The next step is to collect the various assets.
Valuables, such as securities, jewelry and other personal items of substantial value should be kept in a safe place such as a safe deposit box, to which only representatives have access. The "Estate Planning Letter" contained in the Portfolio should be consulted for specific instructions about the disposition of certain valuables.
Provided that title of other assets was properly transferred into the name of the Trust, there will generally be no need for any immediate change of title. However, bank and savings and loan accounts and security brokerage accounts may need to be closed or have their ownership changed to reflect the representative's name. In order to make the change of accounts into the representative's name, the representative may need to use the "Trust Affidavit" provided in the Portfolio. The representatives should thereafter maintain an accurate record of all deposits into and withdrawals from these accounts, reflecting the amount and sources of each deposit and the amount and purpose of each check drawn.
Claims may need to be filed in order for the representative to obtain certain properties to which the decedent's estate is entitled, such as life insurance proceeds, employer pension and insurance benefits, Social Security benefits and Veterans' Administration benefits.
Management of assets entails several duties. First, a representative should be sure to maintain adequate insurance on valuable assets by making sure that existing coverages will continue after the decedent's death and making a note of expiration dates on applicable policies, while also checking that coverage reflects current market values.
Investment decisions will need to be made. Cash income not needed for other purposes of administration, such as immediate payment of expenses, should be placed in interest-producing investments. The Will and Trust documents should be consulted by the representatives for further direction regarding longer term investments.
In due course, it may be necessary to sell some of the estate's property, either because an item should be disposed of to avoid needless expense or loss through depreciation in value, or to raise cash for payment of expenses, taxes or legacies to beneficiaries. Assets should not be sold before first consulting the attorney to ensure that appropriate authority exists or can be obtained. Holdings in a closely held corporation, partnership or sole proprietorship may pose special concerns and problems -- the representative may be required to continue or windup the business in order to avoid a serious risk of loss to the estate. Again, your attorney should be consulted before the representative acts with regard to any businesses.
Payment of Debts, Taxes and Expenses
Again, the first step is for the representative to consult the appropriate estate planning documents in order to clearly define the representative's duties and powers in this area. Creditor claims may need to be paid and, depending on whether they are paid from a probate estate or from the Trust, the representative may have different responsibilities and latitude. Death taxes may need to be paid and, even if taxes are not due, many estates will nevertheless be required to file a federal estate tax return. The estate tax return must be filed within nine (9) months of death. Certain elections and disclaimers must be made prior to filing the estate tax return; therefore, in some cases, the failure to file this return promptly may result in adverse tax consequences. Also, income taxes and returns may be due for the probate estate and the Trust. An attorney or accountant should be consulted. Professional fees may be paid to the attorney, accountant and others, including the Executor or Trustee -- but the Will or Trust must first be consulted. Some of the fees and expenses may not be payable until the probate estate, if any, is ready for distribution to the beneficiaries.
Distribution to the Beneficiaries
Beneficiaries may be entitled to ongoing payments of income and/or principal for a period of time beginning with the death of the decedent, or may be entitled to lump sum payments. The representative may be allowed to distribute property in kind or sell properties and distribute cash. The provisions relating to the distributions to beneficiaries are contained in the Living Trust document. On final distribution of the remaining assets, it is advisable for the representative to obtain a receipt from each beneficiary.
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