Estate and Trust Administration

Estate Administration

Estate Administration is the process of transferring the ownership and control of your assets at your death. In some cases, where you owned the assets outright, the transfer is by your Will, which requires a probate procedure to be effective. For some, such as retirement accounts, life insurance policies, jointly owned property and trusts, not probate procedure is required. There is a short statute of limitations which applies to the creditors of a decedent so that any claims against the estate are barred after one year from the date of death. During that year, the following occurs. 

  • The Will is allowed and a Personal Representative is appointed by the Probate Court. 

  • An inventory of all of the assets of the deceased is created as well as all of the debts and expenses. 

  • Assets are renamed into the name of the estate or into the names of the beneficiaries for non-probate assets, and the value of the assets at the date of death is determined.

  • Legitimate debts of the estate are paid and the questionable debts are denied, 

  • Any assets, such as real estate, that need to be are sold and the proceeds added to the estate.

  • At six months, the alternative value of the assets is determined and the preparation of the estate tax return, state and federal, is begun.

 
 

  • At nine months, the estate tax return is filled. The lower of the date of death value and the six-month alternative valuation is used for tax purposes, unless the filing of the return is extended. Regardless of the  this is when all estate taxes must be paid on this date. 

  • At twelve months all of the assets should be identified, all debts and taxes paid and the balance is distributed to the beneficiaries, unless there is a delay in the administration.  

  • A final accounting is done and the estate is closed.  

Estate administration takes a year and can be quite complicated. Our experience in administering estates over the last century allows us to anticipate and avoid some of the problems arising from estate administration. 

Trust Administration 

A trust is a unique form of legal property ownership in which one person or entity owns assets for the benefit of others. Trusts are commonly created as an estate planning tool, and the Trustee then oversees the distribution of assets within the trust according to the wishes of its creator.

Property ownership involves the right of possession, the right of use, the right to transfer or sell property and the right to will the property to heirs upon death. The beneficiary of the trust is then vested with limited rights according to the terms of the trust; the beneficiary may have the right to use items within the trust but not to sell them or transfer them or may have limited usage rights and restrictions on what he may do with the assets held in the trust. By restricting the beneficiary’s ownership rights to the trust assets, the trust protects those assets not only from the misuse by the beneficiaries but also from claims against the beneficiary by creditors.

To create a trust, you need to name the beneficiary entitled to use the trust assets, the trustee responsible for trust administration, and the assets over which the trust has power. Beyond this, there are an almost infinite number of variations on how and when a beneficiary receives the use and control of assets, and can include conditions that must be met, such as the beneficiary reaching a certain age, before they can use or control the assets. Not only does this apply today, but it will also apply into the future, in some cases perpetually. 

The trustee has a fiduciary duty when performing the trust administration. This means he owes the highest obligation to protect the assets in the trust and the interests of the beneficiaries. He cannot divert assets from the trust into his own name, put the assets at risk in any way or otherwise behave in such a manner that interferes with the purpose of the trust as determined by the trust's creator.

Do you need help with estate and trust administration?
Erskine & Erskine can help. Contact us today.