Pre-planning is essential in the administration of an estate or trust
With a well thought out estate plan that has been put in place in advance, many families avoid contentious arguments and legal battles that can cause permanent damage to relationships forever.
Those families who do no pre-planning must find a lawyer at the last minute after someone passes away, putting extra pressure on them at a time when they are in mourning. This is obviously less than ideal and may prevent them from picking the best possible lawyer who will do the best possible job to represent their interests in the most professional and timely way.
What you should know about the administration of a trust
One of the most important documents in the administration of an estate is a trust. Trusts are set up in advance, much like a will, but they offer a different set of protections than a will. Trusts allow the transfer of assets without public scrutiny or without having to pay taxes on the transfer of those assets, in most cases.
When a person who has a trust in place passes away, several steps will need to be taken for the administration of the trust. Many times, a person will appoint an attorney to act as an executor of the trust, or it may be handled by a family member.
Regardless of who it is, they will have certain fiduciary responsibilities to carry out by assuming control of the assets contained in the trust.
Generally, those steps will include:
- Identifying and creating an inventory of the assets in the trust. This may be different from the assets in an estate as it is not mandatory (but often times highly preferable) to put all assets in a trust.
- Placing a value on the assets. This will need to be done for income tax, capital gains tax, property tax and estate tax purposes.
- Obtaining a tax identification number for the trust from the IRS. This is followed by setting up a bank account and accounting system for the trust to track how debts are paid and how assets are disbursed.
- Executing the terms of the trust. This includes management of investments, paying bills and debts, and protecting the assets of the trust with a high degree of diligence while also disbursing assets according to the directions spelled out in the trust document.
The Hixson Law Firm serves clients in Mansfield, Arlington, Grand Prairie and other nearby Texas communities.