Checklist for Trust Administration – Part 4
Step 4 of Trust Administration – Paying the Bills and Expenses
by Julie Garber with Steve Beede
Once the date of death values have been determined for all of the decedent’s assets, the next step in settling the Revocable Living Trust is to pay the decedent’s final bills and ongoing expenses related to administering the trust.
It is the successor Trustee’s job to figure out what bills the decedent owed at the time of death, determine if the bills are legitimate, and then pay the bills. Often this is as easy as reviewing the mail coming to decedent and determining if any are bills. Be aware that many elderly persons are victimized by scams. You may find bills that look real but do not relate to anything that you believed the decedent purchased or owed. You have the authority to challenge bills and require the creditors to prove they are valid
The successor Trustee will also be responsible for paying the ongoing expenses of administering the trust, including all on-going personal expenses of the decedent such as:
1. legal fees
2. accounting fees
3. utilities
4. insurance premiums
5. mortgage payments
6. property taxes
7. homeowner’s or condominium association fees
8. landscaping service
9. house cleaning
10. property management
And the list can go on. Obviously, where possible and reasonable, the Trustee will want to terminate all services to the decedent that can no longer be used such as cell phone, internet, television, gym membership, etc.
One major challenge that often confronts successor Trustees is that there is not enough cash in the estate or Trust to pay all the bills. In such cases, the Trustee must advise the creditor of the situation and then make arrangements to liquidate Trust assets as necessary to raise the necessary cash.
At the same time, the Trustee may be under pressure from Beneficiaries to make distributions to them right away. Please understand that no distributions should be made to Beneficiaries until all bills and expenses are paid. Failure to follow this could expose the Trustee to personal liability to pay these bills.
Once the successor Trustee has paid the decedent’s final bills and has the trust expenses under control, the next step is to pay any income taxes and estate taxes that may be due. That comes next week in Part 5 – Paying the Taxes.
BPE Law has been assisting our clients with their real estate, business, and estate planning needs ever since we started doing business. We’re active in the communities in which we live and in protecting and assisting our clients legal interests. If you have legal questions, give us a call at (916) 966-2260 or e-mail me at sjbeede@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
Step 4 of Trust Administration – Paying the Bills and Expenses
by Julie Garber with Steve Beede
Once the date of death values have been determined for all of the decedent’s assets, the next step in settling the Revocable Living Trust is to pay the decedent’s final bills and ongoing expenses related to administering the trust.
It is the successor Trustee’s job to figure out what bills the decedent owed at the time of death, determine if the bills are legitimate, and then pay the bills. Often this is as easy as reviewing the mail coming to decedent and determining if any are bills. Be aware that many elderly persons are victimized by scams. You may find bills that look real but do not relate to anything that you believed the decedent purchased or owed. You have the authority to challenge bills and require the creditors to prove they are valid
The successor Trustee will also be responsible for paying the ongoing expenses of administering the trust, including all on-going personal expenses of the decedent such as:
1. legal fees
2. accounting fees
3. utilities
4. insurance premiums
5. mortgage payments
6. property taxes
7. homeowner’s or condominium association fees
8. landscaping service
9. house cleaning
10. property management
And the list can go on. Obviously, where possible and reasonable, the Trustee will want to terminate all services to the decedent that can no longer be used such as cell phone, internet, television, gym membership, etc.
One major challenge that often confronts successor Trustees is that there is not enough cash in the estate or Trust to pay all the bills. In such cases, the Trustee must advise the creditor of the situation and then make arrangements to liquidate Trust assets as necessary to raise the necessary cash.
At the same time, the Trustee may be under pressure from Beneficiaries to make distributions to them right away. Please understand that no distributions should be made to Beneficiaries until all bills and expenses are paid. Failure to follow this could expose the Trustee to personal liability to pay these bills.
Once the successor Trustee has paid the decedent’s final bills and has the trust expenses under control, the next step is to pay any income taxes and estate taxes that may be due. That comes next week in Part 5 – Paying the Taxes.
BPE Law has been assisting our clients with their real estate, business, and estate planning needs ever since we started doing business. We’re active in the communities in which we live and in protecting and assisting our clients legal interests. If you have legal questions, give us a call at (916) 966-2260 or e-mail me at sjbeede@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.