WHAT SHOULD I DO WITH MY PARENT’S TRUST WHEN THEY DIE?
Nov. 30, 2021
The death of a parent is one of the most stressful and devastating events in anyone’s life. Losing a parent is a loss that does not fade over time. Instead, it shapes the bereaved child for the rest of their life. Along with the stress and sorrow comes a lot of paperwork and legal procedures. Many people who lose their parents do not understand what to do with the deceased parent’s estate plan, including a trust, after the death.
If the trust administration process seems too confusing or uncomfortable, consider contacting knowledgeable estate planning attorney David Bale to help you interpret the terms of your parent’s trust and ease the burden of handling the legal process on your own.
If you were named as a trustee, David Bale could help you understand your role and work through your fiduciary duties and responsibilities. The Law Office of David G. Bale provides estate planning and trust administration services to clients in Westerville, Ohio, and throughout Delaware County and Franklin County.
Trust Properties and How They Are Directed
Your parent’s trust might contain one or several properties directed to it in a variety of ways. Some of the trust properties that may be held in your parent’s trust include:
Personal property: Generally, personal property is assigned to the trust by the grantor (the person who creates the trust). The trust may also contain a list of beneficiaries of specific gifts.
Real estate: A common way to direct real estate to the trust is by deed during the grantor’s life. However, real estate can also be directed to the trust by Affidavit of Transfer on death. After the death, the real estate held in the trust can be either distributed to the beneficiaries or sold by the trustee.
Intangible property: Intangible property, which includes any item of value that cannot be held or touched, can be directed to the trust during the grantor’s life or upon the grantor’s death by a payable on death (POD) designation in a contract. When the grantor dies, the intangible property held in the trust can be distributed to the beneficiaries or held for their benefit if special circumstances exist (e.g., disability due to age or illness).
Qualified funds: Qualified funds can also be directed to the trust by a POD designation, but not during the grantor’s life because of tax consequences. If qualified funds are directed to the trust by a POD designation, there are special rules that apply to the distributions from the trust and tax consequences to the beneficiaries, some of which have changed over the past year.
Automobiles: The grantor’s automobiles can be held by the trust and distributed or sold by the trustee upon the grantor’s death. In Ohio, automobiles may also be transferred through a transfer on death (TOD) endorsement on the title at the Ohio BMV.
If you have recently lost your parent who created a trust during their lifetime, consider speaking with a skilled attorney to help you understand the role of the trustee and navigate the trust administration process.
The Role of the Trustee
A trustee has many roles. The main role of the trustee is to follow the grantor’s instructions and carry out their wishes. Some of the most notable duties of the trustee include:
Act as a fiduciary. Trustees are held to the highest standard of care under the law. This requires the trustee to place the interests of the trust’s beneficiaries ahead of his or her own interests.
Identify the beneficiaries of the trust. The trustee must identify all beneficiaries who will benefit from the trust.
Understand the terms of the trust. One of the most fundamental duties of the trustee is to understand the terms of the trust. In some cases, trustees might need the help of an attorney to help them interpret some of the terms.
Answer the beneficiaries’ questions. The trustee is also responsible for communicating with beneficiaries and answering their questions within an adequate amount of time.
Pay administrative expenses. The trustee will also be responsible for paying all applicable administrative expenses when administering the decedent’s trust.
Settle any debts. The role of the trustee also includes settling all creditor claims and debts that may arise after the death of the grantor. This must be done before any property held in the trust is distributed to the beneficiaries.
Distribute the remaining assets to the beneficiaries. Once all debts are settled and administrative expenses are paid, the trustee would distribute the remaining assets to the beneficiaries according to the grantor’s instructions.
Prepare and file taxes. The trustee is also responsible for preparing and filing taxes before closing the trust.
Create a reserve fund. Last but not least, the role of the trustee also involves creating a reserve fund from which estate-related expenses will be paid.
If the trustee is found to be in breach of their fiduciary duties, he or she can be held personally liable for any losses incurred by the trust. That is why you might want to consult with an attorney if your parent, who recently passed away, named you as a trustee.
How Your Attorney Can Help
Family issues and feuds may arise upon the death of a loved one. Studies suggest that sibling relationships suffer after the loss of a parent. The death of a father or mother may trigger intense feelings of grief and other emotions that may aggravate family disputes regarding the distribution of assets. When there are any disputes regarding the distribution of trust property, it may be necessary to hire a skilled attorney to address the issues that may arise during the trust administration and help the trustee do their job correctly.
Rely on the Experience of The Law Office of David G. Bale
If your parent recently died and you do not know what to do with their trust or other estate planning documents, consider speaking with the experienced and compassionate attorney at The Law Office of David G. Bale. David Bale will listen to your concerns and help you navigate the confusing trust administration process whether you are the trustee or beneficiary of your parent’s trust. The Law Office of David G. Bale handles trust administration cases in Westerville, Ohio, as well as Worthington, New Albany, and throughout Franklin County and Delaware County.