TRUST ADMINISTRATION
The administration of a Trust, whether during lifetime or after a death, is handled by the designated Trustee or Co-Trustees of the Trust. For a Revocable Living Trust, the Trustees are usually the couple or single person who executed the Trust (commonly referred to as the Grantor, Settlor or the Trustor). For an Irrevocable Trust, the Trustee is someone other than the Grantor, one or more persons or a corporate fiduciary designated by the Grantor to serve the Trustee(s).
While the
Grantors are alive, the administration involves transferring title of their assets to the Trust. For a revocable trust, the tax identification number generally remains the social security number of the Grantor. An irrevocable trust generally requires its own tax identification number and separate tax return.
When a death occurs, the administration of the Trust temporarily becomes more complicated, but certainly not overly burdensome. If it is the first death in a couple, the Surviving Spouse or Partner, will usually serve as the sole trustee of their revocable trust and will follow the terms of the Trust, whether they continue to leave everything in one trust for the survivor, or split off into two or more trusts for
tax advantaged sub-trust funding. The Surviving Spouse should be sure to work with their attorney, as well as their CPA and financial advisor to accurately follow the terms of the Trust, to be sure to follow IRS compliance requirements, as well as to be sure asset protection is handled properly.
When the Grantor/Settlor/Trustor is a single person, on their death, as well as the death of the Surviving Spouse, the person named in the revocable trust, as the Successor Trustee, shall step in to administer the Trust. A revocable trust always becomes irrevocable at this point. The Successor Trustee will send out the Notice to heirs and beneficiaries required by the Probate Code, collect all the assets, determine and
pay all debts and liabilities and expenses of administration, prepare and file tax returns (including an Estate Tax return if the total assets of the Decedent are significant), and finally distribute the assets to the Trust beneficiaries, in the manner and amounts set forth in the Trust.
Generally, the Trust Administration can be completed in a more timely and less expensive manner than through the Probate process.