Trust Administration Is Your Friend

“You should avoid probate.”

This is one the most common refrains you hear when you talk to a wills and trusts lawyer or financial advisor. In fact, they have done such a good job emphasizing the evils associated with the probate process that even sophisticated people mistakenly believe that, once they set up a trust or estate plan, they don’t have to do anything else once someone passes

When done correctly, estate planning helps avoid the costs and time associated with administering a will through the Probate Court. You avoid probate administration. But certain critical administrative matters still need to be taken care of. Because many estate planning techniques involve the use of trusts, probate administration is replaced by trust administration. Specifically, the trust often calls for the appointment of a successor trustee who will hire lawyers to assist in the administration of the trust.

When an estate plan has been set up well, it still takes some time and resources to administer the trust. This is not an automatic process. For example, it is still necessary to take certain steps, including:

  • Sending out statutory notices under California Probate Code Section 16061.7 to certain heirs;
  • Paying outstanding bills to creditors, including the IRS;
  • Filing final tax returns, including estate tax returns (even when no estate taxes are due);
  • Identifying and appraising assets that are part of the trust;
  • Distributing assets in accordance with the terms of the trust; and
  • Re-titling assets in the names of the beneficiaries.

The trust administration process is significantly faster and cheaper than probate administration, but it is not free. In my more than 25 years of experience as an estate planning attorney for the owners of privately held and family-owned businesses, I have seen that the average costs associated with administering a trust are often less than half of the costs of administering a comparable estate through probate. Moreover, you have much more control over what happens to your assets during trust administration.

Minimizing Trust Administration Costs
The best way to minimize the expense and time required to administer an estate is to make sure that your estate plan is current. Specifically, make sure that your plan has been updated to reflect new developments in your life such as the birth of new children or grandchildren, acquisition of new assets, or the identity of new beneficiaries and trustees. The more current the information on which your estate plan is based, the less time and money it generally takes to resolve issues, and the more that is left over for family, friends, and charities, and other intended beneficiaries.

Thus, if you haven’t had your estate plan reviewed in the last two years, you should seriously consider doing so now.

Kevin Moore, Founder of Kevin J. Moore & Associates, is focused in the areas of estate planning, trusts and probate services with additional expertise in both domestic and international business transactions and tax planning and tax controversy representation for individuals and companies.