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9 Good Reasons to Conduct a Trust Review

California Trusts, Trust AdministrationNo Comments

trust pic e1378498532909 9 Good Reasons to Conduct a Trust ReviewIf you have a revocable trust, when is the last time you reviewed it to make sure it still meets your goals and complies with current law?  If it has been a few years, then it’s time to conduct a thorough trust review – which is usually best done with the help of your estate planning attorney.

Here are 9 good reasons you should schedule a trust review soon:

1.  Check successor trustees.  For many revocable trusts, the trust owner serves as the trustee with a spouse named as co-trustee.  You should also have designated others to serve as successor trustees, so be sure those designations are still correct.  You should also specify when you want successor trustees to step in – upon the death of the first spouse or after both of you are gone.

2.  Trustee removal by heirs.  Have you provided your heirs with the ability to remove successor trustees?  This should be considered and addressed specifically in your trust.

3.  Distribution of assets by co-trustee.  Many trusts are created that provide the option for co-trustees – generally a surviving spouse – to change the distribution of assets in the trust at his or her discretion after the death of the trust owner.  However, this could lead to family conflict in cases of a second marriage or if a surviving spouse remarries.

4.  Asset protection.  Today, it is probably a wise move to ensure your trust continues during the lives of your children to protect assets from creditors or divorce.

5.  Funding the trust.  You must be sure you have titled all the assets held in the trust in the name of the trust, not the original owner.  This is called “funding the trust”, and if this is neglected, your trust is a bust.

6.  Check beneficiaries.   Make sure the beneficiaries of your trust are coordinated with other beneficiary designations in your estate plan for retirement and investment accounts.

7.  Consider age-based distributions.  Many trusts hold assets for children or grandchildren until they reach a certain age – usually 21.  However, every family is different, so if you believe those distribution ages should change, you will need to update your trust.

8.  Retirement plan benefits.  The best way to pass on retirement plan benefits is via a beneficiary designation form filed with the custodian of your retirement plan.  However, some people choose to name a trust as beneficiary of retirement plan assets.   In this case, your trust should have special provisions that allow annual required minimum distributions to be stretched out for as long as possible.

9.  Estate taxes.  There were major changes to the estate tax laws a year ago, so if you have not reviewed your trust since that time, it should be reviewed by an estate planning lawyer to be sure it is still current and complies with the new laws.

To schedule your trust review or to learn more about creating a trust, contact our Orange County law firm.

How to Choose the Right Trustee or Executor

Estate Administration, Trust AdministrationNo Comments

choice e1336511185349 How to Choose the Right Trustee or ExecutorWhen creating an estate plan, many parents wonder if they should name the oldest child as executor or trustee.  While we certainly understand the thinking behind that choice, what should be guiding your choice is not birth order, but who will do the best job.

Here are some guidelines on how to select the best executor or trustee:

Estate size.  The larger the estate, the bigger the job to manage it.  If you need someone with expertise to manage assets for beneficiaries, you should choose someone with financial prowess or with the management skills to engage expert help.  The person you choose also needs to be well organized and disciplined, with the ability to do what is best for all beneficiaries.

Family dynamics.  If you have more than one child and plan to choose one over the others, this could create conflict.  First, be sure the child you are choosing really wants the job.  If this is confirmed as your best choice, sit down with your other children and explain your thinking and why the child you have chosen has the skills for the job.

Outside counsel.  You do have the option to choose a corporate trustee to manage a trust, which means you would have someone with the legal and financial expertise to manage the trust assets and the impartiality to fairly assess requests and distribute assets.  You will need to weigh the benefits versus the fees the trust will have to pay if you choose this option.

We can help you make the right decision when it comes to choosing an executor or a trustee; contact our Orange County law firm for more information.

How Trustees Can Avoid Problems

California Trusts, Trust AdministrationNo Comments

trust pic 150x150 How Trustees Can Avoid ProblemsIf you have been appointed as trustee of a California trust, then you have responsibilities both to the beneficiaries of the trust and to the law to perform your duties correctly.  If you don’t, you could be held personally liable, which is why many trustees without experience in this area of the law get professional help to guide them in their decisions and duties.

As a trustee, you must locate and protect trust assets, invest those assets prudently, distribute assets to beneficiaries, maintain careful financial records and file taxes.  Under California law, you have a fiduciary duty to the beneficiaries of the trust, which means you must act in their best interests at all times.

While a trust can be administered without the involvement of a court, this doesn’t mean that trust administration is easy.  There are circumstances when problems could arise – for example, if proper records are not kept, if tax filings are not done on time or if assets are not invested wisely.  If a trust is not administered properly, the trustee can be removed and help personally liable for any losses suffered or costs incurred.

Unless specifically prohibited by the trust document, a trustee can generally hire an attorney or financial adviser to help with the administration of a trust.  The fees for these professionals are paid by the trust, not the trustee.  Most trustees find it well worth the cost to obtain expert guidance to ensure they comply with the provisions of the trust and California law.

If you are a trustee and need assistance with trust administration, contact our Orange County law firm.