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The Most Vital Steps in Arizona Trust Administration

Posted by Zach Dana on December 5, 2016

Arizona Trust Administration

Arizona Trust Administration

A living trust keeps probate out of the way. Choosing a Successor Trustee beforehand by creating a trust is a lot easier and less expensive than having to go through the whole probate process. Trust administration is a lot easier and less costly, which smooth things out for the ones you leave behind in the event of death.

There’s a difference between will and trust. Both are important but the latter is better. There are a lot of benefits and protections you can get from having a trust. This means that your estate will be properly and rightfully administered after you die. Your property will also be protected from creditors and others. All of this will still, however, depend upon proper administration, creation and maintenance. To make things more efficient, follow these vital steps in Arizona trust administration:

  1. Inventory

Make an inventory of the assets. Each property or asset specified in the trust must be identified. This includes the titles and other proofs of ownership. You can include those not included in the trust just as long as they are properly documented. This is a very vital step in the process to insure that all these assets will eventually be included in the payable to trust. It is important that such assets be transferred to the trust while you are still alive. This helps your loved ones avoid probate.

  1. Proper Valuation

All the assets of the deceased must be properly valued upon death. This can have important implications on the income tax, property tax, inheritance tax and capital gains tax. There is a high chance that a formal appraisal is not required. However, there are certain assets that would require a written appraisal.

  1. Allocation

This is also known as A/B or A/B/C trust. This means that the assets must be properly allocated to any of the sub-trusts (A,B or C), upon the death of one of the spouses. This is important so that the surviving spouse can avail and use the deceased spouse’s assets. These are protected from creditors and future estate taxes.

  1. Retitle

Each of the assets must be retitled to the “trust.” This is a very important part of trust administration. This secures and protects all the assets from future creditor’s claims, estate taxes and required spend-down. We can efficiently transfer the titles at a timely and cost-effective manner.

  1. Qualified Disclaimers

In this step, you need to determine if qualified disclaimers are necessary. A qualified disclaimer allows you to correct planning mistakes and to take advantage of various estate planning opportunities. It’s an effective and popular post-mostem technique. However, you must discuss this with the attorney first before you making any changes or withdrawals to any of the assets of the deceased.

  1. Taxpayer Identification Number

You need to obtain and secure the taxpayer identification number of your living trust, family trust and/or marital trust. With this, you need to file a Form SS-4 with the IRS (Internal Revenue Service). See to it that the IRS will recognize the trustee and respond to the inquiries.

  1. Form 706 and Form 1041

Determining the need to file form 706 is also a part of the trust administration process. Form 706 is also known as Federal Estate Tax Return. The trustee needs to check out first if there is a need to file or not. An estate worth $5.43, as of 2015, is exempt from tax. If the property is not exempt, the trustee must file within 9 months from the date of death. Properly filing this tax form, when required, will protect the assets against unnecessary taxes and will establish their value.

Unlike Form 706, this form is often required. There is a need to properly report income taxes through this form as timely as possible. The filings include Request for Discharge of Personal Liability, Request for Prompt Assessment and Notice of Fiduciary Relationship.

  1. Distribution of Assets

Being the trustee doesn’t give you limitless power and control of the subject properties. The trustee needs to distribute the assets according the wishes and intentions of the Trustor, as stipulated in the trust. Residuary distributions and specific distributions must be properly and legally handled.

While trust administration is a lot easier than probate, it does not automatically mean that it is not that legally complicated. Everything must be done in accordance with proper legal procedures and laws. To save yourself from dealing with technicalities and legal complexities, better hire an experienced and passionate attorney. We are always ready to offer legal solutions. We will help you out every step of the way.