At Morrill Law, our primary goal is protecting and preserving your
family’s assets and legacy throughout the legal process.
Morrill Law is a San Francisco Bay Area-based boutique trust and estate litigation law firm. Our highly capable attorneys are smart, personable, and passionate about the work we do every day. And while you won’t find a team that’s more knowledgeable about the details of the law and court proceedings, our ultimate goal is really about the bigger picture: protecting families and their legacies.
What is probate?
Probate is a legal process that requires the court’s involvement in 1) transferring the property of someone who has died to the heirs or beneficiaries, 2) deciding if a will is valid, and 3) taking care of the financial responsibilities of the person who died.
Is there a difference between an executor and an administrator of an estate?
If there is a will, an executor is appointed by the court as the personal representative to collect the assets, pay the debts and expenses, and then distribute the remainder of the estate to the beneficiaries (i.e., those who have the legal right to inherit). If there is no will, then the court will appoint an administrator to carry out these same functions. The executor and the administrator perform all tasks under the supervision of the court.
The estate executor or administrator represents the estate and must carry out the terms of the will. However, neither represents the heirs or beneficiaries of the estate.
What is the purpose of an estate administration?
The administration of an estate includes a number of steps; however, the process is directed toward three goals: collecting and managing assets, paying debts and taxes, and distributing the balance of the assets, as provided in the will.
What are the responsibilities of an executor or administrator?
A primary responsibility of the executor or administrator is the collection and management of assets, which can include valuables (e.g., securities, jewelry, artwork, etc.), bank accounts (e.g., savings, checking, credit union, IRAs, etc.), real estate (e.g., home, investment property), insurance policies, etc. An inventory of the decedent’s property should be compiled by the executor/administrator for use by the court and any attorneys involved, and maintained throughout the probate process.
How are taxes handled in a probate?
The executor or administrator is responsible for various tax matters, which can be complex, depending on the gross value of the estate. Income tax returns must be prepared and filed (both federal and state returns) for the decedent for the period from January 1 through the date of death. Because an estate is a separate entity for federal and state income tax purposes, it is necessary to file income tax returns for the estate for each year until the final distribution.
California has no inheritance tax or estate tax. However, an inheritance or estate tax return may be required for the decedent in a state other than California, if the decedent held property in that other state. Consult a tax professional regarding tax issues arising from an estate administration.
Can I be compensated as executor?
The executor or administrator may receive compensation on the amount of the estate for which they are performing administrative functions.
TRUST ADMINISTRATION FAQs
What does it mean to be the Trustee of an estate?
A Trustee has many duties, which is why assuming the role should only be done after carefully considering the position’s responsibilities and duties. The Trustee has a mandate to follow the terms of the trust and the laws that govern the administration of trusts. Careful review and a thorough understanding of the trust is required, prior to accepting a Trustee position. In addition, the Trustee should be willing to seek appropriate counsel and advice regarding the trust administration, when necessary.
What are the Trustee’s duties?
The Trustee must conduct all trust-related activities in accordance with all relevant laws and recognize his/her duty to administer the trust solely for the benefit of the beneficiaries. Impartiality is critical – the Trustee must not favor the interests of one beneficiary over another, except to the extent that the trust provides otherwise. Additional duties include:
- Avoiding conflicts of interest and/or any transactions with the trust that will personally benefit the Trustee.
- Assuming control of trust assets and taking reasonable steps to preserve them.
- Making trust assets profitable, subject to certain exceptions.
- Keeping the assets and debts of the trust separate from the Trustee’s own.
- Taking actions to prevent a loss to the trust (e.g., defending a lawsuit).
- Performing actions on behalf of the trust, rather than having others act on behalf of the trust, subject to certain exceptions.
- Providing financial and other information to beneficiaries.
- Exercising discretion, even if the trust provides that a particular action is entirely within the Trustee’s discretion.
Are there other Trustee responsibilities?
The Trustee must also adhere to the following:
- Cannot require a beneficiary to waive his or her rights as a condition of distribution.
- May not act as trustee of any other trust that has a competing interest with the initial trust.
- Must take reasonable actions to pursue amounts that may be owed to the trust.
- When serving with a Co-Trustee, both have a duty to participate in the administration and prevent the other from committing a breach of the trust.
- Must use at least ordinary business ability when managing the trust property. However, if a Trustee has special skills (e.g., an attorney, accountant, investment advisor, etc.), he/she will be held to a higher standard of care.
What will the Trustee do on an ongoing basis?
Depending on the size and complexity of a trust, the Trustee’s activities will vary. A trust that includes extensive real property holdings may require the Trustee to collect, hold, acquire, dispose of, manage, or insure the property. A trust’s real estate holdings may involve developing land, selling property, and entering into leases.
Other trusts may require the Trustee to operate or participate in a business. The Trustee may also need to vote shares or give proxies, pay calls and assessments related to securities, sell or exercise stock subscriptions and conversions, consent to corporate reorganizations and other changes, or hold securities in name of nominee.
The Trustee may make loans to beneficiaries, guarantee loans, and distribute property to beneficiaries. Other obligations may include settling and paying claims, as well as paying taxes, reasonable compensation of trustee and agents (e.g., accounting, legal and other professionals), and other expenses. The individual requirements of a Trustee will be based on the terms and conditions of the trust. Many other activities may need to be conducted on a regular basis.