Revocable Trusts Avoid Probate, but Not All Administration

To avoid probate, many clients opt for a revocable trust as part of their estate planning documents. A revocable trust is a very good option, and a bit more private since it does not get deposited with a court post-death. A revocable trust does, however, still require some type of post-death administration. It is important that clients understand this to avoid any misconception that “avoiding probate” negates the need for any post-death trust administration.

The administration of a revocable trust can vary depending on how the trust is written and who the beneficiaries are, but at a minimum a Trustee should notify all qualified beneficiaries via a notice that if such qualified beneficiary is seeking to contest the validity of the revocable trust, they only have six (6) months after the date on which the notice was received by such person or else they are barred by Florida statute. In Florida, the term qualified beneficiary includes both current and remainder beneficiaries. Depending on how the revocable trust is drafted and who the qualified beneficiaries are, completing the proper notice and service can still require significant time and effort from the Trustee.

What are some post-death administration items?

Additional post-death administration items may include:

• Communications with the beneficiaries
• The safeguarding, collection, and distribution of the assets, which may include the sale of a home
• Payment of debts and expenses
• The filing of tax returns, including a final individual return (IRS Form 1040), a trust return (IRS Form 1041), and a possible estate tax return if the gross estate value reaches the applicable annual lifetime gift/estate tax exemption amount (IRS Form 706)

Conclusion

A revocable trust has various benefits, but it is important to keep in mind that it will still require some form of post-death administration.

Have questions about trust administration or estate planning?

The attorneys at Katz Baskies & Wolf are here to help guide trustees and beneficiaries through every step of the process. Contact us to schedule a consultation