If your parent had a trust while they were alive, it may be your responsibility now. Trusts can be set up in a few different ways, but they always need a trustee to manage the assets for the beneficiaries. If your parent passed and named you as trustee, here’s what you need to know.
Trusts are often set up so someone can put their assets in trust, but name themselves as trustee and beneficiary. When they pass, they name a successor trustee – you – to manage the trust for the new beneficiaries. This skips probate, but there may still be responsibilities to take care of. Then, the intent may be to dissolve the trust and give everyone a share of the money. Alternatively, the trust might have been set up as they passed for a particular reason.
For help administering a trust, call Flake & Flake’s Henderson, NV estate planning attorneys at (702) 829-5731.
When Are Trusts Used?
Trusts may be set up to have someone manage your money and assets for you while you are incapacitated by illness or old age. You may have been named trustee before your parents passed, giving you the responsibility of managing their assets for them before they passed.
Things may change when they pass away, and you always need to check the trust documents to see what you need to do now.
Trusts may also be used to pass on assets as a will alternative, or to set up a generational legacy fund that will help the family for a long time.
Living Trusts
A living trust is often set up by the grantor while they are still alive. They probably named themselves as trustee and beneficiary, but now that they have passed away, you take over that role.
Purpose
This is a “will alternative,” meant to pass responsibilities to a successor trustee and benefits to successor beneficiaries. This skips probate and does not go through a will, making transfer much faster.
What the Successor Trustee Does
As trustee, you may have to pay some of your deceased parent’s debts and other responsibilities before putting together the rest of the trust corpus and paying incomes to the beneficiaries.
This is likely set up for you and your siblings or other loved ones to get money from.
Intent May Be to Dissolve the Trust
Since living trusts are often used as an alternative to a will, the goal might not be to keep administering the trust, but to dissolve it and pay the beneficiaries equal shares.
We can help you figure out the goal and how to carry it out legally.
Testamentary Trusts
When a will names heirs, it often names people. Instead, it can name a trust.
Purpose
With a testamentary trust, the money is not given directly to the heirs, but managed for them. This is often used when…
- The heirs are too old to manage their own funds – e.g., if your father passes and names you trustee for your mother, to take care of her in her old age.
- The heirs are too young to manage their own funds – e.g., if you are named trustee for your younger siblings’ inheritance.
- The heirs are disabled and cannot accept money, or else hurt their Social Security Disability (SSD) benefits – e.g., if you are named trustee on a special needs trust for a sibling, aunt/uncle, or other disabled family member.
What the Trustee Does
Your job is often to manage the funds on an ongoing basis. This might end when the beneficiary comes of age or meets another condition.
Who Are the Beneficiaries?
Understanding who you are supposed to provide money for is important, as it may come with special rules. For example, if you are caring for your aging parent, this might be a temporary role. If you are caring for a disabled loved one, it could be a long-term role.
Special Needs Trusts
When someone on SSD gets too much money, it can kick them off benefits or reduce their benefit amount. A special needs trust is allowed to be used for certain purposes, without counting against their limits.
Purpose
This can either be set up by a grantor – usually a parent – to provide for certain expenses for the disabled loved one. It can also be set up in a will, since the disabled loved one cannot outright get their inheritance without hurting their SSD eligibility.
What the Trustee Does
Your goal is to administer the funds on an ongoing basis.
How Can the Money Be Used?
There are restrictions on how the money can be used, primarily keeping it for medical care. Even using it for something like housing might not be allowed, so check with our Nevada lawyers for trustee representation for help.
Dynasty Trusts
Trusts may also be set up with the intent to create a generational legacy that can fund the family’s projects or needs for up to 365 years. These set a new trustee to act as a steward of the trust in every generation.
This means you will be trustee now, but you also owe a duty to the future generations, and you will name a new trustee to take up that torch. These are a bit complex to administer, in no small part because of how long they last.
Do You Have to Stay Trustee or Can You Give Up the Position?
If you were named trustee, it means that someone literally trusted you to take care of their funds or assets, or to take care of the named beneficiaries. You can say no to this job, but you might want to consider their wishes in naming you over anyone else.
Do You Get Paid to Be a Trustee?
Generally, trustees do get an income for this role. The trust documents may say the amount; otherwise, reasonable compensation is typically allowed.
How is a Trustee Different from an Executor?
An executor puts together someone’s estate after they die. This is a limited-time role, and only lasts through the probate process and final distribution of the estate.
A trustee can be named before they even die, continue beyond their death, and remain in that role for a long time. The goal here is to manage funds on an ongoing basis, not just after their death.
What if You Are Also the Executor?
You might be named as both! Parents often name their oldest adult child executor. If they also used a trust, you might be named trustee as well.
We can represent you in your role as executor as well, to help you with the probate process.
Call Our Nevada Estate Administration Attorneys Today
Call (702) 829-5731 to speak with Flake & Flake’s Las Vegas, NV estate planning lawyers.
