Estate Settlement

What To Do With A Living Trust – Starting Tips

Financial Security Group of AZ will help to protect what you’ve earned and ensure it lasts and is here to help you make the best decision for your situation. For more information on trust types, tax-reduction strategies, and how a living trust may protect your wealth and accomplish your estate planning goals, set up an appointment today. What follows will be a good starting point for the successor trustee:

Create an Inventory of All Assets and Liabilities of the Estate

The best way to start is by obtaining statements and deeds to review any assets, debts, expenses and current bills. Be sure to mark whether assets are titled to the name of the trust, the sole parent’s name, or the names of both parents.


Ordering Death Certificates

When it comes time to order Death Certificates, make sure to order around ten copies. Larger estates may require you obtain more death certificates, but only about 10 are used on average. You will want to be sure you have enough to send out, and although you can order more at any time, you may be able to avoid additional fees by ordering ahead of time in bulk.


Locate Trust and Will

Find an original or copy of the Living Trust and also find the original will. It is important that you find an original will; if a copy of the will is presented to the court, there’s a chance it won’t be accepted on the basis that a missing original will indicates deliberate destruction.


Accounting

As trustee, it is of utmost importance to keep records of all your expenses. Unless otherwise waived, you are responsible to give a written account of expenses to the Trust beneficiaries.


Obtain a Trust Tax Identification Number

Financial institutions will not accept social security numbers on accounts of deceased persons. Obtaining a copy of the Trust tax identification number. Ask your attorney or CPA to help you correctly fill out your application form to get a new tax identification number.


Notify Beneficiaries

As trustee, you must send notice to all beneficiaries, according to A.R.S. section 14-10813:

“Unless the trust instrument provides otherwise, a trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless the trustee determines that it is unreasonable under the circumstances to do so, a trustee shall promptly respond to a beneficiary’s request for information related to the administration of the trust.”


Affidavit of Death of Trustee

In order to sell or change the title of real property, you will need to record an Affidavit of Death of Trustee with a Death Certificate which can be done in accordance with the county recorder.


File Claim for Reassessment Exclusion for Transfer Between Parent and Child

In cases where a parent is passing property to their children, the trustee can file a Claim for Reassessment Exclusion for Transfer Between Parent and Child. If the claim is not filed, or if property is being passed on to someone who isn’t a child of the trustee, the country assessor will reassess the property in question and adjust taxes. If you are filing the claim, make sure you include a copy of the Trust with it.


Income Tax Return

If you are claiming a refund on behalf of a deceased taxpayer, you must file Arizona Form 131. However, if the refund is issued in the name of the decedent, it may be cashed with the endorsement of the court appointed executor or the administrator of the estate. 


Fiduciary Tax Return

You may need to file a Form 1041 fiduciary tax return depending on the asset types and how quickly they are to be distributed. After the death, social security numbers can not be used to report income, so the form you fill out will have information about income earned on the Trust assets from the date of death until the date of distribution. 


Property Distribution

Most often, Trusts have specified individuals to receive personal property. It is up to the trustee to have recipients sign a receipt and obtain the items. Items that are not specified for distribution may then be equally divided among the beneficiaries, donated or sold as part of an estate sale.


Make Preliminary and Final Distribution to Beneficiaries

Additional bills may roll your way over the next year, so we advise that the trustee holds back a certain percentage of the funds in order to cover anything unexpected. After no more bills are expected, you can distribute the last of the funds.


Small Estate Affidavit

Assets left out of the Trust can usually be transferred via a Small Estate Declaration under Probate Code Section 13100, as long as the combined value is less than $150,000.


Get a Receipt and Waiver of Further Accounting

Make sure you keep a log of the accounting leading up to distribution, and then have the beneficiaries check the books before receiving their part of the distribution in order to avoid any scrutiny afterwards. Make sure your beneficiaries sign a receipt upon each distribution along with a waiver of further accounting. 

Financial Security Group is here to assist you with your estate settlement

To begin, please fill out our online form and we will:

  • figure out which documents you will need
  • help you identify any possible issues
  • and create a detailed list of tasks specific to your trust

After reviewing the trust with you, we can offer specific services to further help. We would be proud to help advise you on any questions you may have, along with finding the next step. Our list is by no means complete, but it contains core steps you will likely need to take regardless of specifics to your trust.