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A loved one has recently passed away and has named you as the “Successor Trustee” or the “Executor.” Now What?

Trust Administration and/or Probate is a mystery to clients. And, administering or settling a Trust is very similar to a Probate procedure. The big difference is that it is done without Court involvement and can be handled with the assistance of a good Probate and Trust lawyer.

Don’t be fooled by those who say that “there is nothing that needs to be done.”

There are many issues. Tax, Creditors, Beneficiary disputes, etc. Here is a quick summary of the steps that you need to take. We represent only Trustees and Executors. We do not represent disgruntled beneficiaries. Our job is to protect you from incurring liability as a result of a “breach of your fiduciary duties”.

What are the key steps?

1. Prepare an Inventory of the Assets – This is like putting together a puzzle of the decedent’s finances. Looking at past Income Tax Returns of the decedent is helpful. That’s where being a CPA as well as an attorney is helpful. Obtain bank statements, brokerage statements, etc.

2. Safeguarding the Assets – making sure that all insurance policies are in force and up to date. Changing the locks, changing the address of the mail, securing passwords, etc.

3. Settle all Creditor Claims – paying all of the last illness and medical expenses. Negotiate with credit card companies. Handle any creditor claims. Publish notice of creditors in the newspaper.

4. Tax Issues – File final income tax returns with the IRS and Arizona Dept of Revenue – elect “portability” for Estate Taxes. Eliminate Capital Gains – Get date of death values – “stepped-up cost basis”. Make appropriate elections under the IRAs.

5. Convert the Assets to cash – collect life insurance policies, sell the house, sell all stocks and bonds, etc. Collect the IRAs, Annuities, etc. Divide up “personal property”, jewelry, etc.

6. Pay yourself as Trustee the appropriate amount as determined by the lawyer, and pay the CPA for the final income tax returns and pay the probate attorney. Usually, your fees as the Trustee are similar to the lawyer’s fees.

7. Prepare a final Accounting and Proposed Distribution Schedule to all beneficiaries – Obtain a Settlement Agreement with all Beneficiaries. Obtain Releases of Liability from the beneficiaries to release you as you performed your “fiduciary” duties as the Trustee.

8. Distribute the Assets to the Beneficiaries.

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