When an attorney settling a trust passes away, the beneficiaries and interested parties of that trust can feel like they are on a ship sea without a captain. However, whether the attorney was the trustee, or only directing distributions and other trust actions, there are specific rules he was following to close out trust disbursements. By learning these rules, beneficiaries and interested parties can find a new ship captain to complete the trust disbursement process.
Contact the attorney’s office. Often there is another attorney in the firm that has been charged with handling the workload of a deceased partner. If the attorney wasn't the trustee of the trust, you should still interview the new attorney handling the case. It might make sense to change attorneys if the new attorney lacks experience working with trusts or probate court.
Consult the trust document. If the attorney was the trustee of the trust, read the contract for a contingent trustee. Often a trust will specify either the process for finding a new trustee or will appoint a new contingent trustee. Search for language about hiring a new attorney if your current representative isn't a trustee and can't serve. If there is no language in the document, the current trustee is free to interview new attorneys, or administer the estate without one.
Determine the new trustee. The trust will specify a new contingent trustee of the trust. If not, the local probate court will appoint a fiduciary. Until someone is appointed, there might be no disbursement of funds or transactions on behalf the trust. To find the probate court, ask your local county clerk. Often the clerk's office can direct you to the applicable probate department.
Interview possible new attorneys. Even if the trust doesn’t specify that there must be an attorney handling the estate, a good trust attorney will have the resources to smoothly complete the estate process. You should ask the attorney about experience with trusts and probate, education, and fees.
Make a record of trust transactions, if you’re the new trustee. Until a new attorney is appointed, or if working without attorney, avoid commingling personal assets with trust assets, and apprise beneficiaries about any trust actions. This includes asset purchases, sales, fees paid, or money disbursed.
Disburse and track all trust funds according to the trust, if you're allowed. Only the trustee can distribute funds. Read the trust rules to determine how and when assets should be distributed to beneficiaries. Once claims against the trust have been paid, or a reasonable amount has been held back to pay all trust expenses, begin moving funds to beneficiaries.
File trust taxes if you're the trustee. Trusts must file taxes with the IRS. It may be helpful to hire an accountant familiar with trust tax returns. The IRS requires that trusts file Form 1041 by the normal filing date for that year, on or around April 15th. Check to see if the final tax return has been filed for the deceased. This must be filed by the same date the decedent would have filed a return normally, also usually on or around April 15th.
- The deceased attorney can hold retainer fees and documents relating to your trust. Contact his office for documents and a refund if you switch firms. If the attorney was a sole practitioner, or the firm won't comply with your wishes, contact the state bar association.
- San Diego Estate Planning Lawyer Blog: What Happens When Your Lawyer Dies?
- Financial Planning Association: How to Choose a Trustee
- Professional Fiduciary Association of California: What is a Fudiciary?
- Bernalillo County: Ask the Probate Judge - Finding an Attorney
- Brady Morton Attorneys at Law: Understanding the Duties and Responsibilities of a Successor Trustee
- Internal Revenue Service: Publication 559; Final Income Tax Return for Decedent - Form 1040
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