Trust Administration – Helping Your Successor Trustee be Prepared

Even if you have created a well-designed estate plan that achieves your goals, you may still wonder how to ensure your plan will be administered as you expect. If you have named a family member or loved one as your successor trustee, will that person be capable of carrying out their fiduciary responsibilities during a time of emotional distress and mourning? If you have chosen a professional trustee, how do you know your trust will be administered smoothly and according to your wishes? To get the most out of your trust, be sure to work with a qualified attorney who can assure you they are prepared to help your successor trustee wind down your affairs, administer your trust, and ensure your beneficiaries have what they need during the administration process. 

The trustee you name will have fiduciary duties, owed to the trust beneficiaries, that must be upheld throughout the trust administration process. The trustee must administer the trust according to its terms and cannot use the trust for their own benefit. As well, the trustee must deal with all beneficiaries impartially. 

These are some of the more important trust administration duties your trustee will have:

  • Locating your estate planning documents (trust document, will, etc.). You can help by letting your trustee know where these documents are kept and by giving the trustee your attorney’s contact information.


  • Collecting other important documents such as insurance policies, real estate deeds, car titles, bank and investment account statements, and tax returns.


  • Meeting with your attorney to determine the strategy for administering your trust and to prepare the legal documents needed to carry out that plan.


  • Preparing a list of creditors and arranging to pay off any debts.


  • Preparing lists of property, accounts, jewelry, and other valuables, and obtaining a professional valuation of these items, when needed.


  • Filing all the necessary tax returns and paying any taxes due. This could include not only the trust income tax return and the estate tax return, but also a final income tax return.


  • Maintaining the required trust accounting.


  • Understanding what property and money are included in the trust, and ensuring things are allocated and transferred to your beneficiaries in a way that reflects your intentions as expressed in the trust.

While this list may seem intimidating, a qualified attorney can help guide your trustee successfully through each step in the process. 

If you have not recently reviewed your property and assets, trust funding, choices of trustees and beneficiaries, and the structure of your plan, we would encourage you to contact our office for a free consultation.

We would also invite you to download a free copy of our Successor Trustee Manual from our website at At Kling Law Offices, our goal is to help you plan well and then to help your successor trustee carry out those plans so you can have the peace of mind you deserve.

The SECURE Act as Enacted – The New Rules for Retirement Plans

The much-anticipated SECURE Act (Setting Up for Retirement Enhancement Act) (the “Act”) finally passed both houses of Congress and was signed into law by the President on December 20, 2019, becoming effective on January 1, 2020. As we discussed in an article late last year, the SECURE Act “reforms” retirement savings rules with the goal of increasing access to tax-advantaged accounts and giving older Americans increased opportunities to maximize their savings. A few of the key points of the new Act are discussed below and we urge you to consider how these changes impact your retirement savings strategy and estate plan. 

RMDs Bumped to Age 72: The Act pushes back the age at which retirement plan participants must take required minimum distributions (RMDs). Previously, RMDs started at age 70½ and now they can be delayed until age 72. This extra year-and-a-half of growth on retirement savings will be almost universally beneficial in helping people make their money last longer.

No Age Restrictions on Contributions: As expected, the age cap for making contributions were eliminated so that anyone who is working and has earned income can contribute to a traditional IRA, regardless of age. 

Part-time Employee Access: Many more part-time workers will be eligible to participate in an employer plan under the new Act. Part-time employees who work either 1,000 hours in a year or have three consecutive years with 500 hours of service will be eligible to sign up for an employer offered 401K or a Simple IRA plan. 

The Down-Side: The Act eliminates the “stretch IRA” option for non-spouses inheriting retirement accounts, instead of requiring a full payout within 10 years of the original account holder’s death. Thus, most beneficiaries will be required to draw down assets more rapidly than under previous rules, possibly losing out on years of compounding investment growth. Limited exceptions now include assets left to a surviving spouse, a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent. 

The Up-Side: The Act makes it easier for small business owners to establish “safe harbor” retirement plans with provisions that make plans less expensive and easier to administer. Employers who create a 401K or Simple IRA plan with automatic enrollment can receive a tax credit of $500 per year. By encouraging more employers to offer 401k plans, the Act aims to increase access to and participation in employer-sponsored retirement plans. 

Other up-sides include allowing the use of 529 accounts to repay up to $10,000 in student loans annually (which can be applied retroactively to December 31, 2018), and a penalty-free withdrawal of up to $5,000 from a 401k to pay the cost of adopting a child. 

For a free consultation to discuss how the changes introduced by the SECURE Act may impact your business, your retirement accounts, and the value your assets will yield to beneficiaries, call our office today. Through intentional and informed planning, you can have the peace of mind you deserve.

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Keeping the Protections of an Asset Protection Trust

If you are in the fortunate position to have, or to be considered, an asset protection trust, a new court case from Texas identifies the importance of respecting trust conventions if you want to keep the protections of an asset protection trust.

In this recently decided case, a lucky couple and their children were named beneficiaries of an asset protection trust established by the wife’s parents in 2009. Several years after the trust was established, the husband and wife transferred one of their own properties into the trust. In the ensuing years, the husband and wife made several more transfers of assets into the trust. After eight years, the husband and wife had transferred several millions worth of property and business interests into the asset protection trust. The settlors of the trust, on the other hand, funded the trust with $1,500.

What triggered the court case was the husband’s 2017 Chapter 7 bankruptcy filing. At that point, the husband and wife claimed the trust assets were protected from creditors because it was a third-party spendthrift trust. The distinction is that a third-party asset protection trust is “settled” (set up or established) by someone other than the beneficiaries, as compared to a first-party trust in which the settlor and the beneficiary are the same people. The Bankruptcy Trustee challenged this point, in addition to making other claims to invalidate the asset protection trust.

While the issue is a technical one, it boils down to whether a third-party can set up an asset protection trust that will extend asset protections over additional assets transferred into that trust—even if such later contributions are made by the beneficiaries themselves. The Texas court said, “No.”

In rejecting the husband and wife’s claims, the court distinguished between the assets contributed by the original settlers of the spendthrift trust and the additional assets contributed by the husband and wife. The court refused to treat trust assets in the aggregate, deciding that because the beneficiaries contributed their own assets to the trust, those assets were available to creditors as part of the bankruptcy estate.

The court was simply not agreeable to the husband and wife’s argument that the umbrella of an asset protection trust would protect everything in the trust no matter who made the contribution. Rather, the court emphasized that a trust could not be used to escape creditor claims when the formalities of the trust were not respected.

For the rest of us, this ruling serves as a forceful reminder to use trusts properly. Knowing what a trust can and cannot do is important, as is respecting the purpose and boundaries of your documents. By not doing so, this Texas couple had no protection for the millions in assets they wanted to shelter.

If you are interested in asset protection trusts, contact our office for a free consultation. Nevada law offers unique options, and we can help you understand how these trusts might help give you the peace of mind you deserve.