Setting up a living trust will protect an individual’s assets and offer benefits to them and their beneficiaries. However, situations arise when the person dies and leaves the trust without a trustee. In this case, a family member may step in and settle the trust after the passing. If you want to dissolve a trust that your deceased loved one has set up, there is a process you must follow. This process should play out based on the law. In this situation, an attorney from The Ebbert Law Firm can help you avoid mistakes that can complicate things further. Read on to know a living trust can be settled following death.
Take a Trust Inventory
To dissolve a living trust, you must understand what is in the trust in the first place. Collect all documents related to this trust including the trust document and any pour-over will associated with it. Also, you should gather documents such as automobile titles, real estate titles, bank statements, insurance policies, investment statements, bills, debts, beneficiary lists, death certificates, tax turns, and any business documents.
Talk to a Lawyer
Unless you have enough experience dissolving a living trust, you must seek legal advice from a trust lawyer. The dissolution process is technical and requires adherence to related laws and regulations. Any mistake you can make could lead to delays, unexpected challenges, and tax liabilities.
Your lawyer will review the documents, determine the missing or incomplete one, and compile a file that can be used throughout the process. By getting an attorney involved in the early stage of the process, settling a trust following the death of your loved one will be smoother.
Figure Out the Value of Assets in the Trust
The value of the assets must be determined and listed at the time of death. It is important to determine how to settle a living trust following a person’s passing since value can change eventually. To get this done properly, you may need to seek help from different people.
For example, if the trust has non-cash assets like real estate and collectible artwork, an appraiser must set a value to ensure accurate reporting. The same must be done if your deceased loved one owed a business or co-own a partnership.
Again, you must consult with a lawyer to complete this step. Your deceased loved one may have assets that are not part of the trust. Such assets may have to be factored into when conducting overall valuation. Plus, part of a trust settlement involves paying related taxes, which depend on such values.
Settle Bills and Obligations
When executing a living trust following the death of a loved one, you must pay the bills, obligations, taxes, and expenses. The successor trustee must collect all related bills and pay the ongoing expenses related to administering the trust until dissolution and such obligations are released. An attorney can help you determine what, when, and how bills must be paid.
After paying the bills for the trust, you must take care of the administration’s taxation aspect. In Particular, you must prepare tax returns and pay all taxes owed. Sometimes, living trusts can incur tax liabilities and inheritance taxes may also need to be settled. All taxes due should be paid to the state and federal government when needed. You must pay them promptly to avoid delays and penalties.
Distribute the Assets
The assets in the trust must be distributed based on the deceased person’s wishes, so the trust can be legally dissolved. A lawyer can help determine when this step should be taken since you must be sure the trust will not incur more bills, tax liability, or expenses before the distribution of assets.
