Orange County Trust Administration Lawyer

Compassionate and Experienced Trust Lawyers

Looking for experienced Orange County trust attorneys to help you navigate the trust administration process? Look no further than OC Trial Group. Whether you are a trustee looking for guidance in fulfilling your fiduciary duties or a beneficiary who needs guidance in ensuring a trustee is fulfilling their fiduciary duties, we are here every step of the way, providing expert guidance and support through the complexities of trust administration.

What is Trust Administration in California?

When someone passes away in California with their assets held in a trust, the transition of their assets and properties into an estate for distribution follows a distinct legal process known as trust administration. Unlike probate, which is commonly associated with other jurisdictions, trust administration in California involves a systematic review and execution of the trust’s provisions.

In California, the trust administration process encompasses crucial tasks such as validating the trust document, appointing a successor trustee, identifying and assessing assets, settling debts and tax obligations, and ultimately distributing the estate in accordance with the decedent’s wishes or California law.

Given the potential for complexities and delays in the trust administration process, it is advisable to seek guidance from a knowledgeable trust administration attorney before initiating the process. This legal professional can provide valuable insights, navigate potential challenges, and ensure a thorough and efficient administration of the trust in adherence to California regulations.

What Duties Does a Trustee Have to Beneficiaries During Trust Administration in California?

As a trustee in California, your paramount responsibility is the meticulous administration of the trust in accordance with the stipulations outlined in the trust instrument. In instances where the trust instrument is silent on a particular decision, adherence to the provisions of the California Probate Code becomes imperative. A California trustee must also comply with their duty to provide notice under Probate Code § 16061. 

In broad strokes, your duties encompass the obligation of loyalty, impartiality towards beneficiaries, avoidance of conflicts of interest, prudent control and preservation of trust property, segregation of trust assets from personal property, and the application of any specialized skills you possess to enhance trust administration.

While you are generally required to personally perform entrusted tasks, certain exceptions allow for the engagement of investment advisors, attorneys, tax preparers, and property managers. Failing to seek advice when lacking requisite skills or knowledge may expose you to liability for negligence. In cases where delegation is permitted, the prudent selection and supervision of delegated individuals remain crucial.

California mandates adherence to two distinct yet interconnected rules governing trust affairs. The Prudent Person Rule dictates the trustee’s administration of the trust in all matters except the investment of trust assets. This rule underscores the necessity for the trustee to administer the trust with reasonable care, skill, and caution, mirroring the conduct expected of a prudent person managing a similar enterprise.

The Prudent Investor Rule, on the other hand, establishes a more rigorous standard specifically for the investment and management of trust assets. In compliance with this rule, the trustee must approach investment decisions with due consideration for the trust’s purposes, terms, distribution requirements, and prevailing circumstances. Exercise of reasonable care, skill, and caution is paramount in meeting this elevated standard. For comprehensive guidance on fulfilling your trustee duties in California, consult with our experienced legal team to navigate the complexities and ensure compliance with state regulations.

What Powers Does a Trustee During Trust Administration in California?

In the capacity of a trustee in California, the initial step involves a meticulous examination of the trust instrument to determine the extent of powers bestowed upon the trustee. Even if the trust instrument imposes limitations on these powers, it is essential to recognize that the courts possess the authority to lift such restrictions. The exercise of powers must align with the prudent investor and prudent person standards, as detailed above, all while safeguarding the best interests of the beneficiaries.

It is crucial to note that the mere grant of a power does not automatically mandate its exercise. When deciding whether to wield a particular power, the trustee’s paramount consideration should always be the well-being of the beneficiary.

Under the California Probate Code, the trustee’s powers encompass various key aspects:

Additionally, California law extends further powers as may be necessary for the trustee to fulfill duties effectively. For comprehensive guidance on navigating and utilizing trustee powers in California, consulting with an experienced legal team is recommended. The dedicated professionals are committed to ensuring the trustee’s actions align with legal standards and serve the best interests of the beneficiaries.

Avoid Commingling Assets During the Administration of a Trust

In the usual scenario where the surviving spouse assumes the role of trustee, it’s common for them to maintain management of the family’s bank and brokerage accounts as if they personally owned them. This inherent inclination underscores the significance of separating trust assets from the trustee’s personal assets. The more time it takes to distinguish assets allocated to the survivor from those destined for the administrative trust, the more complex the task becomes. Swiftly establishing accounts in the name of the administrative trust, dedicated to receiving trust funds and securities, is highly advisable to streamline this process.

Common Mistakes Made by California Trustees

When fulfilling the pivotal role of a trustee in California, it’s crucial to be aware of common pitfalls that can arise during trust administration. Whether you are a trustee who needs advice on complying with their duties or a beneficiary seeking to redress a trustee’s failure to comply with their duties, OC Trial Group’s experienced trust administration attorneys are here to assist you in avoiding the common pitfalls encountered during trust administration in California. Some of the common pitfalls made by California trustee’s during administration of a trustee include:

Keeping Beneficiaries Informed

One prevalent mistake trustees make is insufficiently informing trust beneficiaries about trust administration matters. Neglecting the duty to keep beneficiaries reasonably informed can lead to complications. Trustees must communicate essential information to enable beneficiaries to enforce their rights under the trust or address any breach of trust. This includes providing complete and accurate information when requested and planning for an annual report, even if not explicitly asked for.

However, a trustee does not have to comply with a beneficiaries request to keep them informed in any of the following situations:

Beneficiaries requesting information should provide sufficient advance notice, and if copies of trust records are desired, the cost of copying may be charged to the trust.

Trust Bookkeeping

A common oversight of a trustee is underestimating the importance of meticulous trust bookkeeping. The trustee’s internal financial records, whether as basic as a checkbook or as intricate as a double-entry bookkeeping system, are integral. Beyond mere bookkeeping, trustees must actively track both principal and income, often managed through a fiduciary account.

Saving Records

When it comes to the records of the deceased, the surviving spouse often grapples with the question: “How long do I have to keep checkbooks, passbooks, tax returns, and other important papers?” The answer depends on whether the records pertain to the period before or after death. Typically, records linked to the period before death should be retained for five years, especially if the assets underwent an adjustment to their income tax basis upon the deceased spouse’s death. However, for assets without a new income tax basis, these records should be kept indefinitely, as they will be essential for income tax reporting purposes upon the eventual sale or transfer of assets.

For records concerning the post-death period, i.e., the administrative trust, prudent practice dictates retaining them for the term of the trust plus an additional five years. Subtrust records should adhere to a similar retention period. In certain instances, it makes sense to consider indefinite retention, particularly when subtrusts involve contingent, minor, or unborn beneficiaries, as the statute of limitations for potential lawsuits may extend over many years. Additionally, records related to the valuation of assets in the survivor’s estate and those justifying decisions made in funding trusts should be retained until after the passing of the surviving spouse.

Regardless of other considerations, trustees might find it beneficial to preserve skeletal records, such as copies of the federal estate tax return, appraisals of illiquid trust property, fiduciary accounts, and income tax returns. With the advancement of document storage technology, including options like hard drives, cloud storage, and USB flash drives, trustees can efficiently store all or part of the trust books and records, addressing concerns about cost and storage space.

When deciding to discard trust records, a proactive approach involves offering them first to one or more of the distributees of the assets. This action not only demonstrates consideration but may also serve as a defense if trustees face criticism in the future for not retaining certain records.

Why Choose OC Trial Group’s Trust Administration Lawyers?

By selecting OC Trial Group as your trust administration attorneys, you benefit from their extensive experience, in-depth knowledge, proven success, and client-focused approach, ensuring that the trust administration is handled with professionalism and care.

Extensive Experience in Trust Administration and Litigation

OC Trial Group boasts a team of renowned attorneys with a wealth of experience in handling diverse and complex trust administration, as well as trust litigation matters. Their unparalleled experience in representing trustees and beneficiaries in litigation matters makes them better equipped to ensure that a trustee is complying with their duties throughout the administration of a trust.

In-Depth Knowledge of Trust Matters

OC Trial Group’s attorneys possess a deep understanding of the intricacies of trust administration, estate planning, and probate law. Their comprehensive knowledge ensures that your case is handled by legal professionals who understand the nuances of trust and estate-related conflicts.

Proven Track Record of Success

OC Trial Group has consistently delivered successful outcomes for their clients. Their past achievements and positive results in similar cases showcase their ability to navigate legal complexities, negotiate favorable settlements, and, if necessary, litigate cases in court. Their reliable track record instills confidence in their ability to handle your dispute effectively.

Personalized Representation

OC Trial Group prioritizes client satisfaction and strives to provide personalized, client-focused legal services. Their team actively listens to your concerns, comprehends your unique situation, and tailors their strategies to meet your specific needs. Choosing OC Trial Group means partnering with attorneys who genuinely care about your case and are dedicated to achieving the best possible outcome for you.