When most of us think about implementing an estate plan, we think of the obvious tasks such as gathering all of the assets and making distributions to the beneficiaries. The role of a trustee can be far more complex, however. This is true especially where the decedent left behind an estate plan that was designed to minimize taxes or avoid creditors. These plans sometimes involve the use of trusts that call for sub-trusts to be created and funded upon the death of the creator of the original trust. As the trustee, it becomes your job to ensure that these sub-trusts are funded with assets of the trust.
Six Steps to Take Before Funding Sub-Trusts
Attempting to fund sub-trusts without taking the proper steps is dangerous, as it could put the assets of the trust at risk. Consider taking the following steps if your loved one has passed away and you are now tasked with the responsibility of administering a trust that includes sub-trusts:
- Consult with an experienced attorney who can guide you through this process. The estate and tax laws surrounding credit shelter planning are complex and require guidance from a knowledgeable professional.
- Consult with a tax professional experienced in administering trusts. The tax advisor that you work with will assist your attorney in making important decisions relating to which assets should fund the sub-trusts.
- Create an up-to-date list of all of the assets held in the trust. This will be an important tool for the tax advisor and attorney to work from.
- Obtain values on all of the property that is held in the trust. The value should be based on the date of death of your loved one.
- Consider whether certain assets may appreciate more rapidly or slowly over time, and notify your attorney and tax advisor so that they are aware as well. This information may play a large part in deciding which assets should fund a sub-trust.
- Carefully review the terms of the trust to determining whether your loved one left specific instructions relating to the funding of his trust.
Fortunately for trustees, you do not have to navigate the process of funding a trust or sub-trust alone. The Law Office of James F. Roberts & Associates, APC, has helped many clients properly administer trusts. We invite you to view our client testimonials page today to learn more.