Developing a Plan to Protect Individuals, Families, and Businesses.

 

Trust Administration

After having a living trust created, an individual would need to make sure there is property funding of the living trust or any sub-trusts that may have been created.  If someone fails to fund the living trust or sub-trusts, then that person and the person's family may lose many of the important benefits of the trusts that were created.

What does it mean to have a "funded" living trust?
A living trust is "funded" when the trustors (also called grantors or settlors), the creators of the living trust, transfers titled of their property to the living trust and assigns their personal property to the trust.  The purpose of the trust is to hold property for the benefit of somebody.  If the trust does not hold title to anything, then nothing is being managed by the terms of the trust.  An unfunded trust defeats the purpose of avoiding probate. 

What needs to be done if my loved one died with a living trust?
One of the first things that you should do is take an inventory of what is in the trust, meaning what is in title of the trust.  Next you would begin administering the trust.  Be sure to read all the provisions of the trust, so you do not miss any instructions.  Usually you will have to obtain a federal ID for that living trust, which usually becomes irrevocable upon the death of the trustor.  Before any distributions take place, the successor Trustee will need to tie up any loose ends, such as pay final expenses of the decedent and file final tax returns, then figure out whether the trust instructs the Trustee to create sub-trusts.  After the sub-trusts are created, the successor Trustee will need to fund those sub-trusts. 

Sub-trusts could be created as a credit shelter trust or separate trusts for minor children.  If the successor Trustee fails to create the necessary sub-trusts and fund them properly, then that person may be held liable for breach of his or her fiduciary duty.

 

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