Here's what needs to be done after someone who had set up a Louisiana Avoid Probate Living Trust passes away.
Obviously, there are a number of non-legal tasks that must be addressed, from making funeral arrangements to notifying family and friends. But once we start talking to a family about legal matters, the initial things we often review are the trust instrument and the assets.
Regarding the trust instrument, we will always initially review who was designated as the Successor Trustee or Co-Trustees. We'll also take a close look at what action is required after the death of a Settlor. The actions required may be very different depending upon whether the Settlor was married or single at the time of his or her death.
If the Settlor was married, the trust might require that assets be divided into two trusts after the first death. This was pretty much "standard practice" back when the estate tax exemption was lower and we wanted to make sure that the assets of the first spouse were not lumped into the estate of the surviving spouse for federal estate tax purposes. Now, with couples being able to exempt more than $20 million, it's not as critical that there be a division of assets upon the death of the first spouse.
If the Settlor, at the time of his or her death, was married, then the trust is likely to require distributions to the principal beneficiaries of the trust, although some trusts may require that assets remain in trust for some period of time.
Another thing we look at is the assets of the Settlor and in the trust. The trust may own real estate, investments, or other assets. The trust might be named as the beneficiary of the Settlor's IRAs, life insurance, or annuities.
And the Settlor may have owned assets in his or her own name when the Settlor died. Assets may have either intentionally or inadvertently been left out of the trust. If there are probate assets left out of the trust, then we want to determine the existence and contents of, perhaps, a pour-over Will. If there are probate assets in the Settlor's individual name (not in the trust), a Succession may be required to pour-over those assets into the trust for distribution.
Finally, as part of this first step, we want to review the trust instrument to determine the rights and obligations of the Trustee and the beneficiaries. Some trusts have customized duties and powers that must be followed.
Bottom line - don't assume that you know what the trust instrument provides and requires. Work with an estate planning attorney who can spot and solve issues that you do not know exist.
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