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The Role of a Trustee in Estate Settlement

February 26, 2012 | Comments: 0 | Views: 233

Selecting a Trustee is a vital part of estate planning whenever a trust is used. This person acts as the estate fiduciary and is required to engage in estate settlement proceedings in accordance with directives provided in the last will and testament.

A Trustee needs to be established for every kind of trust. These include living, testamentary, revocable and irrevocable trusts, and irrevocable life insurance trusts. Every type includes a Trustee, Trustor, and Beneficiary.

The Trustor is the person that sets up the trust. The Trustee is the person responsible for settling the estate and overseeing distribution of inheritance property. The Beneficiary is the person identified in the last Will to receive property owned by the Trustor.

All estate assets that are not transferred to a trust must undergo the probate process. The exception to the rule is when assets have been gifted prior to death or assignment of beneficiaries is established.

The probate process ordinarily takes four or more months to complete. Complications arise when a person dies without writing a Will or if heirs contest the Will. With trusts, estate settlement can occur quickly, with assets being transferred to heirs within 45 to 60 days.

There are many benefits of establishing trusts to safeguard estate assets. In addition to being able to avoid probate, inheritance property is often exempt from inheritance tax. While Trustees are in charge of settling the estate the process is much swifter and less invasive than probate.

For the most part, trusts are used when the value of estate assets surpasses $100,000. Other estate planning methods can be used to achieve similar results when estate values are less. A few of the most common include establishing beneficiaries for financial assets and titled property, and giving annual tax-free gifts.

It's highly recommended to hire an estate planning service or lawyer to determine which kind of trust offers the best protection. Everyone's situation is unique and requires careful planning to minimize estate and death taxes.

Living trusts are the most commonly used estate planning method. They offer flexibility and let Trustors make changes when needed.

Irrevocable trusts provide a lot of protection and can be arranged to suit each person's needs. However, they cannot be modified unless authorized through the court.

Irrevocable life insurance trusts are commonly used when estate assets exceed $2 million. Beneficiaries have the right to take annual distributions, but the objective is to let funds accumulate to cover the cost of inheritance tax.

Testamentary trusts are created after a person passes away. It is commonly used when assets are gifted to minor aged children. The objective is to transfer or conserve financial assets until heirs reach legal age.

The cost to setup trusts runs the gamut from $100 to $2,500, or more. Fees are determined by several factors including the state where property is held; kind of property involved; and the type of trust being established.

Careful consideration should be given to the chosen Trustee. The person should be trustworthy; good with finances; and someone that can be counted on to make decisions in the best interest of heirs and beneficiaries.

Learn about the kinds of duties a Trustee has to perform from California probate liquidator, Simon Volkov. He shares a wealth of estate planning information to help visitors learn about the different ways to protect estate assets. He also demonstrates how to write a Will and the basics of setting up a trust at

Source: EzineArticles
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