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Protect your estate with a living trust sample checklist at the death of a living trust settler


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Protect your estate with a living trust sample checklist at the death of a living trust settler
contact connie at for list of living trust lawyers in Northern California 408-854-1883
Now hiring part time financial planners in the bayarea 408-854-1883
Help others keep their wealth tax free and help those with terminal illness get portion of their funds before they die.

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Protect your estate with a living trust sample checklist at the death of a living trust settler

  1. 1. Protect your Estate with a Living TrustSample Checklist at the Death of a Living TrustSettlerContact for lists of Living TrustLawyers in the bayarea, Northern CaliforniaConnie Dello Buono Financial Rep Ca Life Lic 0G60621408-854-1883Among the definitive checklist of procedures, paperwork,documentation, and record-keeping whichshould be followed:• Deeds transferring real estate property to your trust(which are unrecorded, if any) need tobe recorded at this point (do not use joint tenancy orfile an affidavit death of joint tenant topass property). Important to this process is the submittalwith the deeds of the proper countyforms correctly filled out and completed (to avoid re-assessment).• Affidavits Death of Trustee: Affidavits must be prepared,properly executed, and recorded along withCertified death certificates for each piece of real estateproperty. (The purpose of these affidavits is to givethe successor trustee signature power over said property –without which they would be powerless to act.)Again, the proper county forms correctly filled out need toaccompany these affidavits (to avoid reassessment).
  2. 2. • Analysis of Assets: What is in the trust, what is outsideof the trust, what is the easiest way toget an asset in the trust which isn’t titled in the trust, howare death benefits collected and how dothey fit in; etc.. These items and more need to be analyzed.• Proper Valuation: The fair market value of all assetsneeds to be established as of the date ofdeath. There is a right way to do this to avoid potentialproblems with the IRS and many wrongways.• Tax Issues: There are issues of final income tax returns,depending on the value of the estate thepossible need for an estate tax return (the trustee is heldpersonally liable for seeing that thereturn is filed and any taxes paid), properly establishingstepped up basis, properly establishingdouble stepped up basis for surviving spouses, EIN or taxnumbers for the trust, 1041 Fiduciaryreturns, tax elections, possible disclaimer issues, etc..• Ascertaining Creditors and Paying Debts: Attentionmust be paid to properly dealing with debtsand creditors. It should also be ascertained as to whether ornot a “creditor’s claim process” isappropriate to head off any possible future claims.• A/B/C Trust Allocation: Approximately 90% of all“Married-couple trusts” require the trustee toallocate assets between sub-trusts (Often referred to as A-B& C trusts or disclaimer trust.)
  3. 3. Failure to pay attention to these formalities can result in theloss of huge tax advantages (i.e. theloss of a large estate tax exclusion). What rights does thesurviving spouse have? Whatrestrictions does the surviving spouse have? What are thesurvivor’s duties? Parts of the trustbecome irrevocable at the first death. Again there is a rightway to take care of these items andmany wrong ways.• Need & IRS Time Limitation for Disclaiming: Manymarried-couples elect a “Disclaimer trustapproach” to their tax planning. This disclaimer approachallows the surviving spouse to choose(at the first spouse’s death) whether or not (and to whatextent) he/she wants to use an exemptionsub-trust. Yet, if the surviving spouse takes ownershipof the deceased spouse’s assets(&/or starts treating them as her/his own) – or -- failsto exercise a qualified disclaimerwithin nine months (of the first spouse’s death) – theability to exercise a disclaimer will belost (negating any potential use of the deceasedspouse’s exemption).(Note: There are also instances when other beneficiariesmight want to disclaim where the same rules and timelimitations apply.)
  4. 4. • Trustee Duties: The trustee is under the highest legalobligation to the beneficiaries to carry outthe terms of the trust as set forth, and to also give trustaccountings.Also the trustee is requiredto serve certain notices on the beneficiaries and heirs.This requires a careful analysis of thetrust terms and distribution provisions. There is also theissue of properly distributing oradministering the trust assets to the beneficiaries while alsoprotecting the trustee.On and on the issues can go. (The above is not an all-inclusive list). That is why it is important andnecessary to examine the individual circumstances of thesituation to come up with the correct tasksand approach.Taken one step at a time (with proper guidance) it is almostalways a fairly straightforward process. It is only whenpeople do not seek out competent guidance and/or try tounderstand and deal with it all at once that it becomesproblematic. Our advice is to get proper legaland tax advice and take it one step at a time. We know fromexperience that if you follow such advicethis will be a much easier and more tolerable experience.It is important to re-emphasize that implementing a trustwas a wise move.While you may think that theexpenses and tasks which now need to be completed seemsomewhat of a burden and hassle, we canonly tell you that it is a minor task when compared to thetremendous amount of money, time, headache,and paperwork involved with Wills and Probate.
  5. 5. And do not make the mistake of thinking joint tenancy wouldhave been better.Joint tenancy is the wrongway to avoid probate. Though passing property via jointtenancy may seem a little easier on the surface, itcomes at the expense of losing a major income taxadvantage. Typical cases of using joint tenancyuselessly expose the surviving individual(s) to $50,000.00,$100,000., $150,000. and more in incometaxes (upon the sale of the asset) which they otherwisewould not have owed.