Page 31 - Senior Housing Directory 2021 South Central Michigan
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 Five Steps of Trust Administration by Samantha Sprague
A Revocable Living Trust (trust) is
a modifiable document used to hold the owner’s assets during their lifetime and allows the owner to dictate how their as- sets are controlled and who will inherit their assets (beneficiary).
Typical trust owners set up trusts
to maintain control of assets until their incompetence or death; decide who will be in control after their death; protect any special needs or minor beneficiaries; and save loved ones time and money by avoid- ing probate.
To ensure these goals are met and a smooth transition of assets, I recommend that trust owners conduct periodic reviews. Two common and preventable reasons a trust fails: (1) the owner didn’t transfer their assets to the trust, and/or (2) the trust is outdated. Complete trust reviews during the owners lifetime.
Failure to properly maintain a trust can make closing it a diffi- cult process upon the death of the owner.
Upon Trust Owner’s Death – Once the trust owner passes away, the trust goes into the trust administration phase.
This is where the person or corporation that was appointed to control the trust (successor trustee) begins to act. Trust administration takes approximately 12-18 months to finalize. If a trust holds special considerations or requires probate, the process may take longer.
If the trustee does not have experience administering a trust, I highly recommend they consult with an attorney that special- izes in estate planning as mistakes can be costly. The steps listed below are purely for educational purposes and are not intended to constitute legal advice.
Step 1: Review Documents – A review of the legal documents is crucial. Each trust outlines the owner's wishes on how their assets should be divided and some go into detail regarding special requirements.
Step 2: Trust Management –
Experienced trustees will customize a checklist of items required to manage the trust and ensure they meet deadlines. Begin to record trustee hours, mileage, etc. and save receipts for any expenses incurred. The trustee should begin to:
• Make a list of trust assets and confirm ownership.
• Notify beneficiaries of their status and the trustee’s acceptance.
• File notice to creditors.
• Obtain employer tax identification
number for trust.
• Update certificate of trust existence. • Open trust bank account.
Step 3: Pay Trust Expenses – Once the trustee has a firm grasp on trust assets and expenses, they will begin paying allow- able and enforceable expenses. This can include items such as funeral expenses, taxes, insurance, debts, etc. In estates with limited assets, there is a hierarchy regarding which expenses should be paid first. All debts are not equal.
Step 4: Distribute Funds to Beneficia- ries – Once trust expenses have been paid and a final accounting has been provided, the trustee will begin to distribute assets according to the trust terms and notify beneficiaries of their intent to close the trust. Maintain a copy of final accounting and tax information for 7-10 years.
Step 5: Closing the Trust – After all assets have been distributed, expenses paid, and taxes filed, the trust is closed.
    Just because
you can’t take it with you
is no excuse to leave it in such a mess.
Estate Planning Wills • Trusts Probate
Diane K. Peters
  905 W. Michigan Ave., Suite A • Marshall, MI 49068 (269) 248-6500 •
         Serving the Southern and Mid-Michigan Region Virtually and in person at offices in
Kalamazoo and Lansing.
  Free Virtual Consultation
Virtual & In-Person Meetings Available

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