If you’re thinking about what you need to do to as a trustee of an estate… here’s a checklist that will really help you understand what’s involved…
1. The first step in administering a trust is to gather all official documents and records you will need during the process. Collect all estate planning documents and other important records of the deceased, including:
- Last will and testament, trust documents, including any trust amendments and restatements, and the Certification of Trust
- Several certified copies of the death certificate for the decedent from the funeral home or vital records office
- Life insurance policies, annuity contracts, pension plan statements, IRA and 401k account statements, and related policies and retirement plan documents
- Birth certificate and social security number
- Marriage license, divorce decree, and property settlement agreement if applicable
- Most recently filed federal and state income tax returns
Documentation of military service, such as serial number and veteran’s discharge papers
- Trust transfer deeds, other real estate deeds, and title to vehicles
- Financial statements, account statements, and other financial records.
2. If you are also serving as executor or personal representative of the deceased person’s estate, you may want to review the Pennyborn.com Executor Checklist for estate administration for a list of steps required to settle an estate.
3. Review the trust agreement thoroughly for information regarding your powers as trustee and the limitations on your authority. Post executor bonds if required. Consult a trusts and estates attorney to ensure you fulfill your duties as trustee in accordance with applicable law.
If the living trust contains marital deduction provisions or bypass trust provisions, it is essential to consult an attorney and a tax professional before taking any action regarding trust property.
4. Secure all trust property. Review the contents of any safe deposit boxes held in the name of the trust. Create an inventory of property, accounts, and other assets in the trust.
5. Meet with an attorney and tax advisor. If the trust property includes stocks, bonds, limited partnerships, a business, rental property, or other investments of significant value, consult a financial planner in addition to an attorney and tax professional. See Find a Financial Planner.
Manage trust investments prudently. You may need to open a brokerage account or other investment account to hold securities owned by the trust or invest trust funds. A trustee should get professional assistance if necessary to properly perform the trustee investment duties.
6. Establish a bank account for the trust. For a list of steps involved in opening an account for a trust, see our section on how to Open Trust Account.
7. Apply for insurance proceeds, employment compensation, government benefits, and other types of benefits that are payable to the trust, such as annuity contracts, death benefits on a life insurance policy, and IRA’s, 401k’s, 403b’s, 401a’s, and pension plans.
8. If you plan to seek beneficiary consents, waivers or releases, consult an attorney about drafting enforceable language based on applicable state law. Review our article on Trust Beneficiary Release.
9. Maintain accurate records, accounts, and financial statements regarding all trust income, expenditures, sales, transfers, and transactions. You will need these records to prepare a Trust Accounting Form.
10. Review the grantor’s estate planning documents to determine if he or she disinherited an heir or left only nominal amounts to heirs that may have expected more substantial inheritances. Identify any potential trust dispute or claim that may be brought by a disgruntled heir. See Will and Trust Disputes. Consult an attorney regarding the best way to handle any potential claim against the trust or the trustee.
11. Pay debts and expenses regarding trust property. Pay federal, state, and local tax obligations of the trust and file required tax returns with the help of a tax advisor. For a list of tax returns you may be required to file, see tax returns due.
12. Complete a trust accounting and provide the accounting to beneficiaries if required. See living trust accounting. If a distribution is being made at the same time, the trustee may enclose the accounting report with the trust distribution letter.
13. Distribute trust income or property to trust beneficiaries according to terms of the trust agreement. Complete transfer deeds and other change of title documentation. Document distributions to beneficiaries in a formal letter indicating that a final distribution has been made. For an example of how to write a final distribution letter to beneficiaries of the trust, refer to our Trust Distribution Letter form.
14. Prepare documentation closing the trust. Completing the paperwork to close a trust is an essential but often missed step in the trust administration process.