Settling an Estate and Trust

The Fiduciary’s Duties

Before addressing the required tasks, get organized. Establish a formal and efficient recordkeeping system, detailing all tasks and timelines. Conduct an inventory of assets, along with their date-of-death fair market valuations. Also, review investments and claim insurance benefits.

With a system in place, you can address the fiduciary’s responsibilities:

Retrieve Documents

• Locate the will, trust instrument, beneficiary designation forms, and other documents. Obtain 8 to 12 certified copies of the death certificate.
• Secure and maintain personal property and residence until they are transferred or sold, and acquire titles to accounts and assets to determine proper ownership and valuations.
• If property has not been formally titled in the name of the trust before death and does not have a beneficiary designation, you will likely need estate administration with the probate court to formally change the asset’s title.

Make Notifications

• Per state requirements, provide written notice to beneficiaries and any heirs within 60 days of death.
• Arrange and pay for the funeral, memorial service, and other immediate post-death expenses.
• Notify the Social Security Administration, the Department of Health, and any pension plans making regular payments.
• Pay outstanding debts, pay and cancel credit cards, and address all digital assets and online accounts. Keep all receipts.
• Family members often want inheritance funds quickly, but all states require a period of notice to creditors for any claims to be properly identified and paid. There is significant risk in distributing funds before accounting for all liabilities and taxes.

Open Estate and Trust Accounts

• Apply for new tax identification numbers and open new bank and/or investment accounts in the name of the estate and trust. Even accounts already in the name of the trust will need to be retitled with the new, post-death tax identification number.
• Reconcile all bank and investment transactions for filing income tax returns and distributing the estate or trust.
• Most financial institutions will freeze accounts at death until proper paperwork is completed to open new ones, limiting access to funds in the short term.

Distribute Funds and Property

• Make distributions of remaining assets to beneficiaries according to the terms of the will and trust.
• Secure approval of the distribution schedule from each beneficiary (required by probate courts and most trusts) and appropriate documentation protecting you as a fiduciary. Distributions can be made quickly or after the administration is complete, although many states have laws requiring specific gifts be distributed within a set timeframe to avoid interest accruing.

Follow Tax and Reporting Deadlines

• Federal and state death tax returns are generally due within nine months of date of death, and the fiduciary is involved in their preparation and the payment of any estate tax. Annual income tax returns will also be due with any payment for the decedent, the estate, and all trusts.
• Regular reports on the account assets are required and are the responsibility of the fiduciary.

Professional Guidance During the Process

Having an estate and trust in place before death is prudent, but settling them after death can be challenging. Given these complexities, it is best practice to work with your wealth and investment advisors, attorney, and accountant during the estate and trust settlement process.