It may seem to be common sense that a trustee must pay the expenses of an Orange County living trust or estate. What happens, however, if there are multiple expenses to be paid, but only a limited amount of resources with which to pay them? In these cases, trustees must act carefully as they carry out their duties. Certain expenses, such as income, estate, or gift taxes owed to the IRS, may carry a higher priority for payment than others. Fortunately, an experienced trust administration attorney in California can help ensure that you pay the expenses of a trust or estate in the proper manner.
In general, what rules dictate the order and method for payment of expenses of a trust or estate during administration? The following are five possibilities:
- The terms of the Orange County living trust. Many trusts will contain specific language as to which expenses should be paid at what time, and which assets should be used to pay them.
- The terms of the will. For estates not using a living trust, the will likely contains provisions for paying the expenses of the estate.
- If the estate does not contain specific instructions within a will or trust, California law will often dictate the order and the means in which bills are to be paid.
- Trustees can seek guidance from the probate court in order to determine whether priority should be given to certain bills of the estate or trust.
- The beneficiaries may be able to reach a written agreement as to how and when the expenses of the trust or estate will be paid.
For more information about paying the expenses of a trust administration, it is helpful to understand how a trust works. View our free guide, Understanding the Revocable Living Trust - In Language that Anyone Can Understand in 8 Minutes, for additional information. Contact an experienced Orange County trust administration lawyer today for assistance. Call our office at (714) 459-5481 for a consultation.