You have been named Trustee of someone’s trust. Here is a very basic overview of your responsibilities as trustee, under Ohio law.
The person who made the trust–the “Grantor,” or some people use “Settlor”–must have thought of you as a responsible, trustworthy person to designate you as Trustee of this person’s trust. The trustee has many responsibilities in managing and administering a trust, and shoulders some personal liability as well. If the Grantor has died and you are the first successor trustee, this list will provide you with a basic understanding of what you need to do. You have many responsibilities, and my advice is to seek legal counsel with an attorney experienced in trust administration.
- Again, meet with an attorney unless you are familiar with the Ohio law. A trustee has 60 days to inform beneficiaries of the existence of the trust. Sixty days from what date? Who falls under the definition of “beneficiary,” and are all beneficiaries created equal? Do I send the entire trust, and only if a beneficiary asks for it? Know the answers to these and other responsibilities with keeping beneficiaries informed.
- Gather all of the decedent’s estate plan documents, 10 copies of the death certificate, and the previous 3 years (if possible) of tax returns. Gather together other important documents.
- Read the trust document. Make a list of the beneficiaries, distribution ages, charities named, any restrictions made by Grantor. Son might get a distribution, but does he need to pass a drug test first? Does Daughter receive an increased distribution if she makes certain grades in college?
- Determine assets that are held by the trust and get date-of-death values. Deeds to property will show if the property is held by the trust, as will titles to cars and boats. Review all assets with beneficiary designations to see if the trust is a beneficiary, such as IRAs, life insurance, payable/transfer on death bank accounts, stocks and bonds. Also look for shares in any business interests such as LLCs, corporations, partnerships.
- Determine if probate will be necessary. For most of my clients, a reason for having a trust prepared is the desire to avoid probate. The trust is then “funded” by deeding property in the name of the trust, or re-titling assets into the trust’s name. Sometimes people forget to change ownership of an asset such as a checking account or real property to their trust, or die before getting the chance to. Probate then becomes necessary to transfer ownership for those assets.
- Once you know what assets the decedent owned and their values, pay all bills owed. Before you sit down and start writing checks to creditors, be sure that the bill is legitimate.
- Get a CPA. The decedent might have died before paying taxes and you, Trustee, will need to file the decedent’s final tax return. Some trusts have to file tax returns. Consult a CPA to determine what, if any, taxes are owed by the decedent, the decedent’s estate, and possibly the trust.
- Distribute assets, terminate the trust. The distribution of assets comes *last.* After all bills are paid, tax returns filed and taxes owed are paid, and after probate closes if probate is required, then the trustee can distribute assets according to the terms of the trust. Once the assets are distributed, or if the trustee determines that the value of assets in the trust is low enough that it makes administration of the trust impractical, then the trust can be terminated.
A trustee can shoulder personal liability for improperly administering a trust, so consult with an attorney and a CPA if you are not familiar with the Ohio Trust Code and trust administration. The list above is a basic overview and is not legal advice. If you have questions about your role as a trustee, contact me at firstname.lastname@example.org, or visit http://www.juliemillslaw.com for additional resources.