Oct. 19--A trustee is a manager of assets in a trust. The grantor creates the trust and appoints the trustee. A trustee has a "fiduciary duty" to serve the grantor and not benefit personally.
When the grantor dies, the trustee has the responsibility to "settle" the trust estate. A trustee owes a duty of loyalty to all beneficiaries and safeguards trust assets for the beneficiaries.
Following is a partial list of a trustee's legal and practical responsibilities in settling the trust estate.
--Locate and review all important papers of the grantor, especially any funeral and burial instructions.
--Take care of house or apartment issues of the grantor, such as changing locks, notifying the home insurance company if the house is unoccupied, checking on auto and other insurance policies to protect the grantor's assets against loss or liability.
--Obtain copies of the death certificate from the funeral director or municipality where the grantor died.
--Make a list of all household goods to be distributed to beneficiaries. Take photos of personal property and have a disinterested person who is not a relative as a witness.
--Make a list of all assets with date of death values which create the "cost basis" of assets being transferred to beneficiaries. Cost basis determines income tax liability if assets are later sold and is used to equitably distribute assets to beneficiaries according to directions in the trust agreement.
--Consolidate multiple financial accounts into one account. The check register becomes a record of trust activity for beneficiaries to inspect. The trustee has a responsibility to safeguard and account for trust funds.
--Pay outstanding bills and debts. Otherwise, the trustee may be held personally liable.
--Determine if the trust must file income tax returns or estate tax returns with advice from legal and tax professionals.
--File any necessary claims for life insurance, IRA's and annuities.
--Create an accounting of all trust financial activity from the grantor's death of death until distribution to beneficiaries.
--Transfer assets to beneficiaries and have a lawyer send each beneficiary a "receipt, release and waiver" for signature, confirming receipt of the inheritance and releasing the trustee from further responsibility or liability.
The responsibilities of a trustee are similar to the responsibilities of an executor of a will. The main difference is that wills are used in probate court and trusts avoid probate court, which saves time and money, avoids litigation called "will contests" among beneficiaries, and keeps estate affairs private.
Bonnie Kraham is an attorney practicing elder law estate planning with Ettinger Law Firm, 75 Crystal Run Road, Middletown. She can be reached at 845-692-8700, ext. 119 or [email protected]. This column is intended to provide general information, not legal advice.
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