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M. Franklin Parrish
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Post-Mortem Trust Administration

Many clients believe the following: “If I have a Trust, at my date of death everything will just be taken care of…..”  Nothing could be further from the truth.  In this article, I will share with you actual advisory correspondence to the Successor Trustee for a single client.  This client died unexpectedly at age sixty (60), the estate exceeded $2,000,000, all assets were titled in her Trust, the client had no children, and left all assets outright or in trust for the benefit of various family members.  A family member was named as Successor Trustee.  “Names have been changed to protect the innocent.”

Introductory Letter to Successor Trustee

Mr. John Smith
Successor Trustee
1999 America Avenue
Sunny, California 90000

Re:      Post-Mortem Trust Administration

Dear Mr. Smith:

Please accept my expression of sympathy at the death of Miss Mary Jones.  I appreciate the confidence that she placed in me.

The balance of this correspondence is designed to introduce you to certain post-mortem estate planning issues.  In the next several weeks you and any other advisors will need to take some time to review all current estate planning documents, including the Trust.  There are a series of significant issues which in most cases must be completed by the Successor Trustee within nine (9) months following Miss Jones’ date of death.  Such issues may include, but are not limited to the following:

  1. Locate all original estate planning documents (i.e. Trust, Will, title documents, etc.)
  1. Complete formal written appraisal/valuations of all assets including any real property for federal estate tax and income tax cost basis purposes,
  1. Determine if a federal estate tax return must be filed.
  1. File all necessary federal and state income tax returns,
  1. Retitle/allocate investments and real property between various Trusts, depending upon the estate plan’s structure,
  1. Prepare and record Affidavits Death of Trustee/Appointment Of Successor Trustee for any real property to allow a clear chain of title,
  1. Apply for an appropriate I.R.S. Trust Taxpayer Identification Number, and
  1. Comply with The California Probate Code sections regarding beneficiary notification.

Please understand, the above comments are not intended as legal advice, nor is this correspondence intended as a solicitation for my engagement for post-mortem administration.  In any event, please be aware that most if not all of the above issues, as well as other considerations, should now be addressed by you with the advice of counsel to permit the desired estate planning results.  Finally, should you decide to proceed, please contact my office to schedule an appointment at your convenience.

I am sincerely,

M. Franklin Parrish

The above correspondence is intended to raise the awareness level of the Successor Trustee.  Until that time, he may have thought the title of Successor Trustee was “an honorary role”.  Believe me, it is a full time job.

The Successor Trustee then chose to engage my services.  A conference was scheduled, and the following detailed correspondence was provided:

Successor Trustee’s Post-Mortem Administration Duties

Mr. John Smith
Successor Trustee
1999 America Avenue
Sunny, California 90000

Re:      Post-Mortem Administration of “The Mary Jones Revocable Living Trust”

Dear Mr. Smith:

The purpose of this correspondence is to briefly acquaint you with initial procedures involved in the post-mortem administration of “The Mary Jones Revocable Living Trust”.  Please take your time to carefully read through and review the directions contained in this correspondence.  It is your initial road map in post-mortem trust administration following Miss Jones’ death.  As Successor Trustee, it is imperative that you become totally familiar with the “The Mary Jones Revocable Living Trust” and your fiduciary responsibilities.  If you do not have sufficient time to devote to this responsibility, you may wish to consider resigning in favor of an Alternate Successor Trustee.

Enclosures to Facilitate Post-Mortem Trust Administration:

As a beginning step, I am enclosing the following materials:

  1. Affidavit Of Death Of Mary Jones, As Trustee, And Appointment/Acceptance By John Smith, As Successor Trustee, with attachments (For Investments – 2 originals),
  1. Affidavit Of Death Of Mary Jones, As Trustee, And Appointment/Acceptance By John Smith, As Successor Trustee, with attachments (For Real Property – 2 originals),
  1. Two (2) Personalized Individual Beneficiary Letters Of Notification,
  1. California Probate Code, Division 9, Article 3, and
  1. Sample Successor Trustee letterhead stationery.

Please now establish a filing system either by notebooks and/or also on your computer for the above materials and all future documentation and correspondence.  Thereafter, retain all correspondence received, and make copies of all correspondence mailed.  Also, when contacting any institution (i.e. bank, securities firm, governmental agency, etc.) by phone or in person, be sure to ask for the representative’s name with whom you are speaking, make exact notes regarding the date, as well as the conversation, and immediately confirm the conversation in writing.  Likewise, when requesting any information in writing, send such correspondence “Certified Mail Return Receipt Requested”.  This will establish a written record that you have made a good faith effort to make formal contact.

During our recent conference, we executed in duplicate the “Affidavit Of Death Of Mary Jones, Trustee And Acceptance By John Smith, As Successor Trustee” (for investments and for real property).  You should now make ample copies of the Affidavit and attached Exhibits.  This document will be enclosed with numerous correspondence.  The Affidavit governing real property must now be recorded in Happy County.  The Recorder’s Office address is as follows:

Happy County Recorder
2007 Smile Avenue
Sunny, California  90000
Telephone:  (925) 123-4567

There is a filing fee assessed when recording a document ($10.00 for the first page and $5.00 for each additional page).  You can either hand deliver the Affidavit governing real property or risk sending it through the mail.  If, however, you choose to mail the Affidavit, please prepare a cover letter requesting that it be returned to your attention.

In addition, in advance of our recent conference, I also completed several SS-4 Forms for Trust Employer Identification Numbers for the original Mary Jones Revocable Living Trust, as well as The Alice Smith Trust under Article IX and The Susan Smith Trust under Article X of such Trust Agreement.  The same will now be sent to The Internal Revenue Service, and then returned to your attention.

Beginning Steps in Post-Mortem Trust Administration:

There are a series of time-consuming steps you will need to undertake as Successor Trustee.  Please do not feel overwhelmed by these duties, and simply take one step at a time.  Above all else, always document what has been done and keep an accurate log of time expended.  Per our recent conference discussion, many of these steps may have already been commenced or partially completed.  However, the same bears reviewing.  The following is a list of tasks which you now should address in an organized fashion:

  1. Notify all banks and brokerage firms, etc. with whom Mary Jones had investments. Request from each entity the “fair market value” (i.e. valuation) of accounts/investments as of Mary Jones’ date of death.  Please understand such exact valuations are necessary for preparation all California/federal income tax returns and California/federal estate tax returns.  The federal estate tax return is due nine (9) months following Miss Jones’ death.  However, in the event the net estate value does not exceed $2,000,000, no California or federal estate tax returns will be required to be filed.
  1. As Successor Trustee, you are responsible for the filing of Miss Jones’ final California and federal income tax returns, the Trust’s California and federal fiduciary income tax returns, as well as the California and federal estate tax returns. Therefore, at your earliest convenience, it is important that you coordinate your activities with a competent CPA.
  1. Notify all institutions now managing investments, accounts, annuities, etc., to utilize the new Trust Employer Identification Number, once it is received, in place of Miss Jones’ Social Security Number during the transitional estate settlement period.
  1. Complete a formal written appraisal for all of Miss Jones’ real property and tangible personal property interests. Such appraisals should be by qualified appraisers.  Thereafter, you must make a determination to either liquidate such assets at auction or have the same placed in storage.
  1. Likewise, Miss Jones’ residence should be vacated as soon as possible. However, in the event you choose to continue to maintain the residence, then continue to maintain property/casualty insurance.
  1. Because of the liability you have assumed as a Successor Trustee, you may wish to obtain a bond. However, The Mary Jones Revocable Living Trust waives the bond requirement.
  1. Notify Social Security, as well as any other public or private institution from which Mary Jones had received income payments. Such payments received after her death, most likely will be refunded.  Also inquire from each institution if any additional death benefit is provided.  Likewise, ask for the valuation of Mary Jones’ account as of her date of death.  Such latter issues will also apply to any annuities received.
  1. Pay all final expenses (medical, funeral, burial, cremation, etc.). However, first determine if any insurance coverage can be applied for and utilized.
  1. Concurrent with the above activities, California Probate Code, Division 9, Trust Law: Article 3, Section 16061.7 now requires that you must promptly notify all individual trust beneficiaries of Miss Jones’ death and provided each with a copy of the relevant portions of “The Mary Jones Revocable Living Trust”. For more details please carefully review the enclosed copy of relevant Probate Code Sections.  Finalized personal letters have now been prepared for all individual trust beneficiaries whose names/addresses have been provided.  In advance of mailing such letters, be sure to verify the complete legal names and proper mailing addresses of all beneficiaries.  However, at this time, make no partial distribution of funds to any beneficiary.  In the event an individual beneficiary is deceased, you will need to obtain written evidence of her death, including a Certified Copy of Death Certificate.
  2. Once all of the above tasks have been completed, you must then determine in accordance with the provisions under Article VIII Paragraph D of the Trust Agreement how to allocate assets by percentages among the designated individual beneficiaries. In addition, you will continue to be the Trustee for the benefit of Alice Smith and Susan Smith under Articles IX and X.  These responsibilities require additional beneficiary annual accountings, filing of separate trust fiduciary income tax returns and discretionary income and principal distributions for the next decade.

In conclusion, I hope the above explanation regarding your initial duties as Successor Trustee has been helpful.  Once the above steps have been commenced, please call to schedule an additional conference so that we may determine what then remains to be done in advance of tax filings and beneficiary distributions.  If I can be of further assistance, please contact me at your convenience.

I am sincerely,

 M. Franklin Parrish

Honorary title as Successor Trustee?  I do not believe so!  In future issues we will address Post-Mortem Administration at the death of a married client.  Remember death of the first spouse is a “dress rehearsal” with the Internal Revenue Service.  The final act is yet to come!