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What Is The First Step In Settling A Revocable Living Trust?


The first step in settling a revocable trust in California is sending out the Notification by Trustee under Probate Section 16061.7 to all of the beneficiaries and interested parties. This is a very important step because there is a limited amount of time in which someone can contest the trust, and it begins when you send out the notification.

How Long Do We Have To Settle A Trust In California?

Due to the rule against perpetuity, a trust cannot outlast the youngest member plus 21 years. It is possible to take a very long time to settle a trust. However, it typically takes less than a year.

What If We Cannot Locate The Original Documents And Information Needed To Settle A Trust?

If you still have copies, then copies are good enough to settle the trust. You don’t necessarily have to have original documents. If somebody were to contest the trust on the basis of fraud, they would carry the burden of proof. In other words, if they want to claim that the copies of the estate planning documents are forgeries, they would have to prove that. The original documents are always the best thing to have. However, they are not required.

How Is It Determined If A Trust Will Have To Go Through Probate Or Not?

A trust only goes through probate if there is a contest or question regarding administration that the Court must decide. The assets may have to be Probated because the trust was not properly funded and all of the items that belong in the trust have to be probated according to the pour-over will and put into the trust before the trust can be administered. There are other reasons as well. You might petition for instructions because of some ambiguity in the trust or because you are not 100 percent certain that you are doing the correct thing. Another reason would be to have a judicially supervised trust administration because you have litigious beneficiaries or disinherited parties.

How Does A Trustee Legally Sell Estate Assets To Cover Expenses In California?

If the asset is real property the trustee would record an “affidavit of death of trustee.” This would name the successor trustee and allow them to sell the real property normally. If the asset is a motor vehicle, then notification would go through Department of Motor Vehicles. If the asset is personal property the trustee would usually just offer receipts to the person buying it in case there’s some question later. There is no requirement for the trustee to give notice that they’re selling any of the trust’s assets unless that is specified in the trust. However, it is best practice if something has to be liquidated to contact the beneficiaries to ensure that none of them want to purchase the assets from the estate. Oftentimes children or beneficiaries would prefer to purchase the property than have it go to a third party.

What Happens If There’s Not Enough Money Left After Bills And Other Expenses To Cover Taxes?

The trust’s bills get paid to the extent that they’re payable. The trustee is acting in a fiduciary capacity and if they pay out money that should have been used to cover taxes they may be held personally liable. That’s an issue that takes a case by case analysis.

If The Trustee Chooses To Make Distributions To Beneficiaries First But Expenses Do Come Up Who Will Cover Those Costs?

The trustee is a fiduciary and is responsible to see that all expenses get paid. If the trustee disperses too much money and then expenses come up, the trustee has the right to ask the beneficiaries to return the money so that those bills can get paid. If the trustee does get stuck paying those bills out of pocket, he would then have a cause of action against the beneficiaries.

Is There A Way To Cut Off Creditors That May Arise In The Future And Make A Final Determination Of The Debts The Trust Must Pay?

Settling a trust in California is similar to probate, in that notice must be sent to all known creditors so they have an opportunity to make a claim. One of the best things to do in a trust if you suspect there are unknown creditors is to publish a notice of trust administration. That starts the clock on terminating their ability to make a claim.

Why Do I Need An Attorney To Administer My Parent’s Trust?

As discussed above, administering a trust is a complex process. In addition to the aforementioned things, when it comes to real property, it is very important to file documents with the county assessor in a timely fashion, to ensure that the Prop 13 Tax basis remains with the property. Whether it’s a transfer from parent to child, from sibling to sibling, or from grandparent to grandchild, it’s important to ensure that the lowered property tax basis remains with the property. In addition, it’s important to have a probate referee give a value of the property at the time of death so we will have a basis for determining whether or not there are any capital gains when those properties are later distributed or sold.

For more information on Settling A Revocable Living Trust In CA, a consultation is your next best step. Get the information and legal answers you are seeking by calling (916) 915-8866 today.

California Probate Lawyer Peter Cianchetta

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(916) 915-8866

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