PROBATE AND TRUST ADMINISTRATION: WHAT YOU NEED TO KNOW
When someone who created a trust passes away, trust administration is required. The creator of the trust, also called the grantor, will provide instructions in the document when the trust is created. The grantor will also establish a specific kind of trust – either revocable or irrevocable – and will transfer property into the trust to fund it. A trust administration will be necessary…a probate administration may be necessary.
Upon the death of the grantor, the person who was named as the trustee in the trust document will take over management of the assets and will go through the formal trust administration process.
If you have been named as trustee in the will of someone who has passed away, you may need help successfully navigating the process and a trust administration lawyer Lake St. Louis can help. The last thing you need following the death of a loved one is difficulty or confusion during this process, which can include administrative duties, accounting duties and the serving of notice to beneficiaries.
Trust administration may also require knowledge of several legal and investment matters, and newly names trustees are often inexperienced in these areas. A fiduciary duty is the single highest duty a person can owe under the law and trustees are required to act with care, skill and impartiality. Breaching this duty can have serious legal consequences.
A trustee carries a substantial risk of potential liability and a trustee can be held liable for mistakes or omissions that result in losses for the trust. Trustees should strongly consider getting legal help with trust administration so they do not make mistakes that could cost them later.
The trustee has many obligations during the trust administration process, including providing notice to all beneficiaries of the trust. Once notice has been provided, beneficiaries can file a trust contest. If a beneficiary fails to do so within the time limit provided by law, he may waive his right to contest the trust.
A trust contest involves making an argument that the trust is invalid for some reason, such as the grantor not following legal formalities or not being of sound mind at the time the trust was created. If no trust contest is filed, the trustee will continue with the process of trust administration.
In general, there is no court oversight or court involvement in this process like there is when a will is probated. In a probate administration attorney St. Peters, the Probate Court may or may not be involved with the administration, depending on whether the administration is supervised or unsupervised.
Still, the trustee who is overseeing trust administration will need to ensure he complies with all requirements set forth by law and established within the trust creation document.
The trustee must keep careful and detailed financial records and, in many cases, the trust itself has to file a separate tax return so that income earned from trust accounts can be reported properly to the Internal Revenue Service (IRS).
Keeping these detailed records can be daunting, but trustees can get help from a trust administration lawyer to make sure they are fulfilling their obligations.
The specifics of the trust administration process vary depending upon the type of trust and the instructions from the grantor who created it. In general, the process will involve taking the necessary steps to secure the transfer of trust property to the beneficiaries of the trust. To formally change ownership, the trust administrator will take necessary steps to record the death certificate and officially transfer titles to new owners.
WHAT IS INVOLVED IN A TYPICAL PROBATE ADMINISTRATION?
Whether there is a will or not, if assets are titled in the name of a deceased person after death, probate court will be required. If the probate court appoints a personal representative to conduct the affairs of the probate estate, this is referred to as a “regular” or “typical” probate estate administration. If there is no will being probated, the personal representative is referred to as having “letters of administration.”
If there is a will being probated, the personal representative is referred to as having “letters testamentary.” A regular probate administration usually occurs within one year after the date of death if there is no will. It can occur later than that if there is a will, and it was presented for probate within one year after the date of death.
Usually there is more than $40,000 worth of net assets to go through the normal probate process. You will need an experienced probate attorney to navigate this process, as well as any other type of probate.
Administration can be “independent” or “court-supervised.” Supervised means that court approval will be required for about all action taken by the personal representative. This can lessen the liability of the personal representative, because the judge will approve everything along the way.
Independent administration means that you and your attorney will receive less supervision and can lead to quicker and easier administration. However, because the judge doesn’t approve every action of the personal representative, the personal representative is more likely to be held responsible for any actions taken while serving that role.
From this point, the personal representative creates an inventory of probate assets, gathers all property, liquidates the property, pays debts, and distributes inheritances, but several additional steps occur along the way.
A normal probate administration can take anywhere from 9 to 12 months. However, it often takes longer, depending on many issues.
The following is a very simplified description of some of the steps involved in a typical probate estate administration in Missouri:
- Filing initial paperwork with the appropriate probate court, seeking to open an estate and appoint a personal representative
- Petitioning for the appointment of a personal representative to be in charge of the estate
- Providing legal notice to creditors through direct contact or publication
- Filing an inventory and appraisement with the probate court, detailing the assets to be probated
- Arranging for the collection, management, and liquidation of the estate’s assets when necessary
- Negotiating and/or paying off legitimate debts owed to creditors or claimants of the estate
- Filing a final settlement report with the court, detailing all monies going into or out of the estate
- Asking the court to give final approval to all expenditures and approve inheritance amounts
- Distributing these amounts in accordance with the decedent’s will or Missouri law
- Closing the estate
The above steps usually take a good deal of time. For example, state law allows creditors to have six months after the date of the first publication of notice to file claims against the estate, meaning that the quickest probate administrations generally take between seven and eight months. Even if there are no creditors, Missouri probate law requires this period, which cannot be waived.
Need help with administering a trust or guiding an estate through probate? Contact Legacy Law Center today for a FREE CONSULTATION. Our office can be reached at (636) 887-5297.