What are the duties of the

Executor of a deceased person’s Estate?

Typically, an executor Nolo * Checklist & Notices Kit * must:

  • Find the deceased person’s assets and manage them until they are distributed to inheritors.
  • Decide whether or not probate court proceedings are needed.  (Nolo Probate FAQ.)
  • Figure out who inherits property.
  • File the will (if any) in the local probate court. Nolo Finding and Filing the Will.
  • Handle day-to-day details.
  • Set up an estate bank account.
  • Use estate funds to pay continuing expenses.
  • Pay debts. Notice to Creditor of Death.
  • Pay taxes.
  • Supervise the distribution of the deceased person’s property. White & Williams  *   Nolo.com

 

Common pitfalls include …

self-dealing

buying assets for yourself or  a family member from the estate or trust, even at market price,  American Bar Assoc

the duty of care,

requires a fiduciary to carefully manage trust or estate assets. “prudent investor rule,” which requires a fiduciary to use reasonable care, skill, and caution in managing assets. An executor or administrator is held to a “prudent man” standard, which is lower than a “prudent investor.” Assets must be sold at proper prices and on proper terms.

Duty of Impartiality

A fiduciary must not favor any beneficiary over another. the fiduciary must treat himself no better than any other beneficiary.  Lindlaw.com

NO, it’s too much.  How do I get out of this obligation?

A renunciation is a legal document that states the person named in the will as executor will not act as executor for the estate. Sign the renunciation form or petition and file it legal Zoom * Salvolaw.comLegal Zoom

Can a trustee resign?

Yes. If a trustee wants to resign, s/he can do so:

  • As explained in the trust document;
  • If the trust is revocable, by getting the person who has the power to revoke the trust to consent;
  • If the trust is irrevocable, by consulting with all adult beneficiaries; or
  • By getting a Court order after filing a petition asking the Court for permission to resign. 

Unless the beneficiaries say they do not want one, the trustee must file an accounting of all trust transactions while he or she was acting as trustee.  Santa Clara Court

 

What if the acting trustee dies or resigns or can no longer be the trustee?

If a trustee dies or resigns, is conserved or is declared “incompetent” by a court, or files for bankruptcy, then the trustee can no longer act as trustee and must be replaced.

Some trusts have two or more co-trustees and the trust may say that the remaining co-trustee will be the sole trustee, or may say how a new trustee will be appointed. 

If the vacancy cannot be filled, then a trust company may agree to serve if all adult beneficiaries agree. If that fails, any person who has a financial stake in the trust or any person named as trustee can file a petition to have a trustee appointed. 

Any beneficiary who is 14 years of age or older can nominate a trustee, even though a minor under the age of 18 is not legally qualified to serve as trustee.  Santa Clara Court

 

What if the responsibilities are too much for me?

Consider hiring an attorney, bookkeeper, accountant or corporate trustee to help you. (A corporate trustee can manage the investments and do the recordkeeping.) If you feel you cannot handle any of the responsibilities due to work, family demands or any other reason, you can resign and let the next successor trustee step in. If no other successor trustee has been named, or none is willing or able to serve, a corporate trustee can usually be named. * Estate Planning.com

 

california trust estate and probate litigation.com   Excellent information, but their website is sometimes difficult to navigate.  Excellent video’s

 

Beneficiary's right to know

CA Probate Code §16060 The trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.

16061.5.

(a) A trustee shall provide a true and complete copy of the terms of the irrevocable trust, or irrevocable portion of the trust, to each of the following:

(1) Any beneficiary of the trust who requests it, and to any heir of a deceased settlor who requests it, when a revocable trust or any portion of a revocable trust becomes irrevocable because of the death of one or more of the settlors of the trust, when a power of appointment is effective or lapses upon the death of a settlor under the circumstances described in paragraph (3) of subdivision (a) of Section 16061.7, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust.

“Heir” means any person, including the surviving spouse, who is entitled to take property of the decedent by intestate succession §§6400-6455  under this code.  Probate Code 44 * 

...The part of the intestate estate not passing to the surviving spouse, under Section 6401, or the entire intestate estate if there is no surviving spouse, passes as follows:

(a) To the issue of the decedent, the issue taking equally if they are all of the same degree of kinship to the decedent  §6402 * Nolo

(a) To the issue of the decedent, the issue taking equally if they are all of the same degree of kinship to the decedent, but if of unequal degree those of more remote degree take in the manner provided in Section 240.

 

(2) Any beneficiary of the trust who requests it, whenever there is a change of trustee of an irrevocable trust.

(3) If the trust is a charitable trust subject to the supervision of the Attorney General, to the Attorney General, if requested, when a revocable trust or any portion of a revocable trust becomes irrevocable because of the death of one or more of the settlors of the trust, when a power of appointment is effective or lapses upon the death of a settlor under the circumstances described in paragraph (3) of subdivision (a) of Section 16061.7, or because, by the express terms of the trust, the trust becomes irrevocable within one year of the death of a settlor because of a contingency related to the death of one or more of the settlors of the trust, and whenever there is a change of trustee of an irrevocable trust.

(b) The trustee shall, for purposes of this section, rely upon any final judicial determination of heirship. However, the trustee shall have discretion to make a good faith determination by any reasonable means of the heirs of a deceased settlor in the absence of a final judicial determination of heirship known to the trustee.

§16061.7.   (f) The notification by trustee shall be served not later than 60 days following the occurrence of the event requiring service of the notification by trustee, or 60 days after the trustee became aware of the existence of a person entitled to receive notification by trustee, if that person was not known to the trustee on the occurrence of the event requiring service of the notification.

§16061.9.  

(a) A trustee who fails to serve the notification by trustee as required by Section 16061.7 on a beneficiary shall be responsible for all damages, attorney’s fees, and costs caused by the failure unless the trustee makes a reasonably diligent effort to comply with that section.

(b) A trustee who fails to serve the notification by trustee as required by Section 16061.7 on an heir who is not a beneficiary and whose identity is known to the trustee shall be responsible for all damages caused to the heir by the failure unless the trustee shows that the trustee made a reasonably diligent effort to comply with that section. For purposes of this subdivision, “reasonably diligent effort” means that the trustee has delivered notice pursuant to Section 1215 to the heir at the heir’s last address actually known to the trustee.

(c) A trustee, in exercising discretion with respect to the timing and nature of distributions of trust assets, may consider the fact that the period in which a beneficiary or heir could bring an action to contest the trust has not expired.

Three Don’ts at a Trustee or Executor

How to remove a California Trustee

When a loved one dies  AIG
Steps to settling an estate
Locating Important Papers

Brochure when a loved one dies

11 comments on “Executor – Successor Trustee – What are the duties?

    • Establish a reliable line of communication with each beneficiary and get his or her address, Social Security number, and birth date. This information will help you properly file taxes and create an appropriate payout schedule for the trust.

      There are no formal steps to follow when notifying beneficiaries

      You need to obtain the beneficiary’s address and Social Security Number (SSN). Beneficiary payments will probably contain elements of taxable income. Because he or she must pay the tax on that income, you shouldn’t make any payments without obtaining tax reporting information upfront. https://www.dummies.com/personal-finance/estate-planning/how-to-notify-trust-beneficiaries/

  1. One of the heirs – beneficiaries doesn’t want his inheritance and wants to give that portion to someone left out of the will and/or another beneficiary. What’s the procedure to do that?

    • There’s absolutely nothing to stop you from taking possession of an inheritance, then giving it away. Some people have good reasons for not accepting such gifts, from tax issues to simple generosity. If you would rather not accept an inheritance at all, however, things become a bit more complicated.

      renouncing or disclaiming involves notifying the executor or personal representative of the estate – the individual charged with guiding it through the probate process and settling it – that you don’t want the gift. You must do so in writing, and it’s an irrevocable decision.

      If you decide to accept then give away your inheritance, you have the obvious right to decide who receives it. This is not the case if you renounce the gift. In most states, your disclaimer removes you from the equation just as though you had died before the individual who left you the bequest.

      You haven’t officially washed your hands of your inheritance until you notify the Internal Revenue Service that you’re doing so. https://legalbeagle.com/12327523-can-transfer-inheritance-someone-else.html

      the law views a disclaimer as if you had died, your inheritance would go to the person or persons the decedent directed to receive it in the event of your death. This might be your children, your spouse, a charity or a distant relative. In most cases, you can’t disclaim an inheritance and dictate to whom you want it to go instead. https://info.legalzoom.com/happens-someone-refuses-accept-inheritance-21217.html

      https://dennisfordhamlaw.com/transferring-inheritance-rights/

  2. What do I do with the household belongings that are too nice to just donate to goodwill or a charity and none of the heirs want?

    How do I get the most $$$ for them?

  3. How does an executor transfer title to a car that is being sold from the estate?

    How does he show that he has authority to sign the pink slip?

  4. Beware of administering estates.

    This is a lesson from a coaching session (continuing legal education) this morning. There is an IRS process for imposing estate liens. They apply at the time of death and continue for ten years for whatever liability, known or unknown, as existed at that time or might come to exist at any time during that ten years. It attaches by operation of law whether any notice is given or not, and whether there is any way to know or not.

    The limit of the tax liability is 100% of the highest value of the estate at any time from the date of death thru the date the assets of the estate are issued. It will attach to any accounts and property of the estate first, but if that’s gone, then it attaches personally to the administrator of the estate!

    Here’s how it could work. Suppose grandma dies with a home and rental property worth a million dollars and it’s long since been paid off. Suppose she paid it off with a series of bold financial moves, but she didn’t file her taxes, yet, on that and she owes a million dollars in taxes. But after she dies, no one finds any paperwork to clue anyone in, so the estate is processed based upon what is known.

    The heirs get the property, they sell the property, and everyone is happy.

    Except then the IRS shows up sometime later with their numbers. Maybe they’re right. Maybe they’re wrong. The Administrator has no way to know, so there’s no way to argue. The estate was resolved years ago. The property has already been sold. The IRS tells the Administrator that they are personally liable for the back taxes, plus penalties and interest. The Administrator, having done everything as right as could possibly have been known, is now on the hook for the full value of the estate or the full value of taxes owed, whichever is lower.

    If the heirs had not sold the property, at least, the IRS will attach the property. If the lien totals the value of the property or higher, they can force a sale or surrender. If one heir got property and another got cash, then the one with the real estate ends up taking the brunt of the whole lien.

    Lots of interesting consequences for being the responsible family member! Had I learned the material from today’s class beforehand, I would recommend that people be very careful about volunteering to be an administrator of an estate. You might be stepping up to be the responsible family member, and the other family members might totally trust you, but the IRS really doesn’t care, and they really don’t care if you knew or even had any way to know. When they decide they want their money, they will go after anyone they have to for it.

    I could not tell you how common the scenarios are that were covered in the class today, but both my brother and I have handled estates for the family – and while our family was completely reasonable – we ran into some legal complications both times. Had any of those involved the IRS, any of the nightmare scenarios in today’s class could have been ours!

    Incidentally, the instructor today is a current employee of the IRS who actually handles appeals on these kinds of things. So he is speaking from his personal experience about exactly how he sees these situations play out on a routine basis. The rules are the rules to minimize how people might try to game the system, but he admits that it sometimes sweeps up good people who really did try to do everything right.

    Given how huge this is and the fact that chances are high I may be appointed administrator of future estates, this meant something to me.

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