How to Distribute the Assets of a Living Trust After Death
There are a variety of benefits associated with a living trust. One of the major benefits of a living trust is that the assets contained in such a trust bypass the probate court process when the beneficiary of that trust dies. The assets of the living trust are distributed according to the terms of the trust document itself. With that said, understanding precisely how to distribute the assets of a living trust after death of the initial beneficiary is crucial. The failure to appropriately follow these procedures can result in the distribution of trust assets being deemed legally invalid. The trustee performs these tasks.
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Things You'll Need
- Living trust agreement
- Letter to residual beneficiary
- Inventory of trust
- Appraisal(s) of real estate and select personal property
- Title(s) to real estate
- Deed(s) to motor vehicle(s)
- General assignment of trust assets to residual beneficiary
Instructions
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1
Read and review the provisions of the trust agreement. A living trust agreement names three categories of individuals involved in the trust itself. The beneficiary is the individual who enjoys the income from the trust during her lifetime. The trustee is the individual or institution that manages the assets of the living trust to maximize the profitability of the trust. The residual beneficiary is the beneficiary that receives the assets of the trust when the primary beneficiary dies.
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2
Identify the beneficiary (or beneficiaries) who are entitled to the assets held in the living trust.
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3
Send a letter to any residual beneficiary named in the trust. Advise her of the death of the initial beneficiary (whether or not you think the residual beneficiary knows of the passing). Inform this individual (or individuals) that you are in process of winding down the affairs of the trust. Indicate that you will provide an inventory and valuation of the trust assets promptly.
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4
Inventory all of the assets included in the trust.
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Appraise all major assets in the trust that do not have readily apparent values. A bank account, other type of financial account and stocks traded on the open market all have readily available values. Real estate and jewelry require expert appraisals.
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Prepare a quitclaim deed to convey any piece of real estate from the trust into the name of the residual beneficiary. Real estate is transferred quicker with a quitclaim deed than if a standard warranty deed is used.
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Re-title any motor vehicle into the name of the residual beneficiary.
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8
Change the ownership name on bank and other financial accounts as well as on stocks and bonds from the trust to the name of the residual beneficiary.
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9
Draft a general assignment of ownership interest in all other personal property (jewelry, furniture and related items) to the residual beneficiary. Incorporate a list generally identifying these assets in the assignment document.
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Physically convey personal property, titles and deeds to the residual beneficiary.
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Tips & Warnings
Distributing the assets of a larger trust (one with assets valued over $500,000) is complicated in many instances. Therefore, retaining an attorney or a financial adviser to assist in the process is a wise course of action to take.
Keep thorough records of all actions taken in the process of winding down the affairs of the trust and distributing assets. If anyone challenges your actions, the best defense is a set of comprehensive records documenting the actions undertaken.
