Written by Another key responsibility is settling the grantor’s outstanding debts and addressing tax obligations. You must follow a specific order of priority when addressing estate debts under California probate law. If there isn’t enough money to cover all debts within a category, you must pay obligations in that category proportionally.
Additionally, creditors must file a claim one year after the grantor’s death. You must evaluate any claims made against the trust and decide whether to allow or reject them. Sometimes, you may need to liquidate certain assets to meet trust obligations.
You are also responsible for filing the grantor’s final personal income tax return and any required trust tax returns in the state. Although California does not impose a state estate tax, federal estate tax considerations may apply, depending on the estate size.
Distribution Of Assets To Beneficiaries
Once debts and taxes are settled, you can begin distributing assets to the beneficiaries as outlined in the trust document. This step requires detailed attention, as any deviation from the trust’s terms could lead to disputes. Clear communication with beneficiaries is essential to manage expectations and avoid misunderstandings.
The trust may require assets to be held for a certain period or until a specific event occurs before fully dividing them. You may need to make periodic distributions or continue managing the trust assets during this time. With this, ensure proper allocation of any income generated by the trust assets before distribution to each beneficiary.
Deal With Disputes & Challenges
Even with careful administration, disputes may arise during the process. Common issues include disagreements over asset valuation, conflicts among beneficiaries, or challenges to the trust’s validity. Beneficiaries have 120 days from the date of notification to bring legal action to contest the trust.
As a trustee, you must be ready to handle these challenges, potentially through mediation or, if necessary, by seeking court intervention. A California trust administration lawyer provides invaluable guidance in these situations. Resolving any disputes is essential before you can finalize and close the trust.
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