When someone dies, their estate must be administered to fulfill their wishes and abide by California law. It’s a lengthy and sometimes daunting process.
As a trustee, you must be careful to maintain proper accounting records. The California probate code and your trust instrument require it.
Choosing a Trustee
Choosing a trustee is one of the most critical decisions when creating a will and succession in UAE. The appropriate decision can help preserve your assets and loved ones, whether you select a family member, a professional trustee like a lawyer or accountant, or a trusted firm.
Trustees are fiduciaries who have to manage and distribute your trust assets in the best way possible. A good trustee should have a sound understanding of the law, financial expertise, and experience with trust administration.
If you are considering appointing someone not qualified to serve as a trustee, it may be a good idea to talk to an attorney before making final decisions. The attorney can explain the duties, liabilities, and time-sensitive legal notices a trustee must know, so you can decide who is best for your trust.
In addition to distributing your trust assets, a trustee must inform beneficiaries about the trust and its administration. The trust document usually states that beneficiaries must be reported the trust’s assets, liabilities, receipts and disbursements, and other financial transactions.
Many families choose their family members to serve as trustees because they know them well, they are trustworthy, and they will often not charge a fee. It is a popular option, but you should consider your family’s situation before making this choice. Suppose your trust has many complex assets and a large number of beneficiaries. In that case, you may be better off with an experienced professional trustee or trust company with expertise in the trust administration field.
Getting Started
The rule of trust administration in California is a significant part of the estate administration process. The trust’s objective is to give one individual a mechanism to transfer their material and immaterial assets to another person or entity for their benefit after death.
The person who establishes the trust is called a settlor or grantor, and the trustee is responsible for managing the money and property in the trust. They must follow the instructions in the trust document describing how to manage and distribute the trust’s assets.
In most cases, a trust will have a list of all the trust assets and the names of the beneficiaries entitled to receive them. These beneficiaries are usually people or family members, but they can also be charities or other institutions.
Many trusts also include a “pour-over” provision, which states that any assets not transferred during the settlor’s lifetime will automatically be transferred to the trust upon death. It is a critical way to avoid probate proceedings for investments that would otherwise be subject to the costly and time-consuming process of settling the deceased’s estate.
As a trustee, you should follow the trust rules carefully to ensure that you do not violate any laws or fail to meet your duties as a trustee. You should consult an expert lawyer with any questions or concerns about the trust.
Notifying Beneficiaries
In most states, the rule of trust administration requires that the successor trustee notify the trust beneficiaries when the decedent dies. This notification should include the terms of the trust and give the beneficiaries a deadline for court challenges.
The timeline for this notification varies by state, and it can take several months before any assets are distributed. It is because creditors need time to file claims against an estate before distributions can be made.
Once the assets are transferred to the trust, the trustee must notify the beneficiaries of the distributions and allocations of the property. It includes the values of the assets distributed to each heir and the grants to sub-trusts.
If the estate is disinherited, the trustee must notify the beneficiaries and legal heirs of this status (California Probate Code Section 16061.7). A copy of the trust agreement, information on the trustee, contact information, and the window of opportunity for beneficiaries or heirs to opposing the trust must all be included in the notice.
Suppose a trustee fails to provide these notices to the beneficiaries and heirs. In that case, they are legally responsible for all damages and attorney fees incurred by any disinherited beneficiary or heir and may be replaced. Alternatively, the beneficiaries or heirs can sue the trustee to compel the disclosure of the information reasonably necessary to enforce their rights under the trust or to prevent or redress a breach of faith.
Resolving Claims
When a trust is administered, the trustee must ensure that all beneficiaries and heirs are correctly notified. This notice is typically sent by mail, and any claimant can contest the trust within 120 days of receiving this notice.
Moreover, California law requires that creditors be given a chance to claim against the trust. It is known as the “creditor notice” process. Trustees should work with an attorney to ensure they have provided this notice legally and on time.
In addition, the trustee must also provide a detailed accounting of all transactions and assets. This accounting is critical to ensure that beneficiaries have an accurate picture of their inheritance and can make informed decisions about distributing it.
The trustee is also responsible for efficiently distributing the estate’s assets according to the terms of the trust and state law. It can be complex but essential to the trust’s success.
Defendants in trust litigation often reside out of state, and whether a court has jurisdiction over them usually requires an in-depth analysis. A recent California court of appeals decision reflects that a party’s connections to the forum state may constitute a sufficient basis for personal jurisdiction under the minimum contacts test. The court’s holding is a welcome reminder to practitioners that they should not be too quick to dismiss trust disputes in which parties live outside of California, particularly when those parties have excellent connections to the forum state.