Tuesday, February 9, 2010

Today's Probate Answers

Who Is the Trustee of My Living Trust?
Many Trusts written today are “Self Trusteed” meaning the grantor of the Trust acts as Trustee. While you are alive and competent, you can serve as Trustee. If desired, your spouse can serve with you. However, who should serve as Trustee upon your death or incapacity if your spouse is not available?

Choosing a Trustee can be tough. A dependable grown child will see to your welfare, but may not be qualified or have the best business judgment. A business associate might manage your money well, but you may not trust him with family relationships. A bank has investment experience, is dependable, and will handle the paperwork, but it’s not cheap.

What Do Trustees Do?

The Trustee has the responsibility of managing the Trust assets. Ideally, the Trustee should be someone who can keep records and follow the instructions of the Trust document. While the Trustee need not be a financial genius, the Trustee should know his or her own limits and be able to select appropriate advisors.

Here is just a partial list of what a Trustee may need to do when managing your estate:

• Assumes legal responsibility for the proper administration of the Trust

• Investigates claims against the Trust and opposes invalid claims in court

• Seeks legal counsel when needed

• Establishes bookkeeping procedures

• Inventories and changes titles of assets

• Pays bills

• Performs ongoing accounting

• Submits records for independent audit

• Reviews assets regularly for quality and performance

• Makes timely and thoughtful adjustments to the portfolio

• Promptly collects all assets and related income

• Tracks dividend notices, bond calls, and maturities

• Maintains detailed records of all assets and transactions

• Documents asset acquisition dates, cost basis, and adjustments

• Keeps records of taxable income

• Files annual Trust tax returns

• Furnishes information for beneficiary tax returns

• Communicates regularly with beneficiaries

• Distributes principal

• Arranges for the security, insurance, and maintenance of personal residences and other real estate

• Facilitates transfer of property to beneficiaries or new owners

• Makes sure that the requirements of the courts and taxing authorities are met

• Prepares federal estate tax, final income tax, gift tax, and generation skipping tax returns as required

• Investigates and discharges obligations to creditors

• Determines final distributions in keeping with the Trust agreement

• Arranges final transfer of assets

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