What Happens to My Trust When I Die? The Trust Administration Process
If you create a Trust in Nevada, what happens after you die? Creating a Trust involves placing assets into the care of a third party, known as a trustee, upon your death. The assets are held and administered for someone else’s benefit, known as the beneficiary. When you pass, the person you appointed to manage the Trust’s assets (i.e., the trustee) will begin to carry out the provisions of your Trust.
The management of every Trust will be unique to the Trust itself and the wishes of the person who created it. The legal term for the management of one’s Trust is: “Trust administration.” Although each Trust administration will have some unique aspects, in Nevada, there are certain commonalities in Trust administration. Some include settling Trust debts, transferring property titles, and sending notices to creditors and beneficiaries.
Regardless of the the size of the Trust, there will be numerous steps. Our Trust administration attorneys can help with the process.
TRUST ADMINISTRATION OVERVIEW
Once the settlor (i.e., the creator) of the Trust dies, Trust administration is necessary in order to transfer Trust assets or to manage the Trust in accordance with the settlor’s intent as outlined by the Trust document.
- The Affidavit of Successor Trustee, or AST for short, is a legal announcement that the creator of the Trust has died and that there is a new trustee. With respect to real property owned in the Trust, it is recorded as a legal document notifying the public that the original creator of the Trust, who served as the original trustee, passed away, the date of the individual’s death (confirmed by a death certificate), and the name of the new successor (or current) trustee.
- Lodging Last Will & Testament –– The person in possession of the deceased person’s original Last Will and Testament should file (sometimes referred to as “lodging”) the original Will with the within 30 days of the decedent’s death.
- Identify the Trust’s Assets –– The successor (or new) trustee will verify all of the assets owned by the Trust. A simple list of investment accounts, physical properties, and other assets is not sufficient. The successor should obtain titles and, in many cases, seek appraisals. The trustee will also have to verify any existing debts. Before any assets can be distributed to beneficiaries, the trustee must identify and obtain all assets and titles that can be legally transferred. Due diligence and record keeping are critical to proper Trust administration. Neglecting, hastily preparing, or improperly filing documents and records as part of a Trust administration can prove to be detrimental in the long run.
- Protecting the Trust’s Assets –– In Trust administration, the trustee is also required to protect the Trust’s assets. This includes ensuring that the assets aren’t stolen or destroyed, and that the assets are properly cared for, maintained and insured. Any investments left should be prudently and reasonably invested during the time it takes to administer the Trust.
- Notice to Creditors –– Nevada allows known creditors 30 days to file a written claim with the Trustee from the mailing date of the notice to the known creditor. For all other creditors, such creditors are provided 90 days from the date of first publication of the notice to file a claim with the Trustee, and notification is generally published each week for three consecutive weeks. The information must be provided in a standard form and is typically . A Trust administration attorney can assist in ensuring that notice to creditors is appropriately handled.
- Notice to Beneficiaries and other interested parties –– Part of the Trust administration typically includes notice to be provided to all the beneficiaries (or other interested parties) of the Trust. Nevada law provides that such notice is to be given within 90 days of the Trust becoming irrevocable, which in most cases occurs at the Trust creator’s death. Once notice is provided, beneficiaries and other interested parties have 120 days to contest the validity of the Trust.
- Final Tax Returns –– Filing all taxes due by the deceased person and his or her Trust can be one of the more complicated tasks of Trust administration. The personal representative of the deceased person must file the individual’s last tax return and pay all required taxes. The trustee of the Trust must then ensure appropriate tax returns and estimated tax payments are prepared and made on behalf of the Trust. Professional assistance will help the trustee avoid personal liability by ensuring the specific requirements for tax return filings and tax payments are being met.
- Distributing the Assets: Trust Income and Property –– Once the trustee has settled any Trust debts, provided notice to its beneficiaries, and completed the final tax return, the trustee can begin the process of distributing Trust assets, according to the terms of the Trust. That can include distributions of investment accounts, real property, and any other assets that have been identified as being held by the Trust. Nevada does not require court intervention to distribute the Trust’s assets. However, the trustee has the right to seek court guidance if there are unsettled issues.
Once the property and income have been distributed from the Trust entirely, the Trust no longer exists. The trustee’s job is complete, as well as the Trust administration process. If you’ve been tasked with administering a Trust, our knowledgeable Trust administration attorneys at Lee Kiefer & Park, LLP can help.
Attorney Kennedy Lee practices in all aspects of trust and estate law. He views all legal issues from multiple angles (e.g. from litigation to administration point of view) to provide a higher quality of service to our client.