As a probate realtor in Los Angeles, I often see families grapple with the emotional fallout of a loved one’s passing, only to be hit with unexpected legal and financial challenges. These challenges frequently arise from mistakes made during the crucial period immediately following a death—specifically, neglecting the process of Trust Administration or Probate Administration.
Many people believe that simply having a trust or a will is the end of the estate planning journey. It’s not. The plan is just the blueprint; the administration is putting it into practice. I recently spoke with a leading attorney who specializes in this exact process, and his insights highlight why taking immediate, professional action is non-negotiable for preserving your legacy.
Estate Planning vs. Administration: Two Sides of the Same Coin
The most fundamental mistake is viewing estate planning and administration as separate. They are inextricably linked:
- Estate Planning (The Blueprint): This is the hypothetical document—the will or trust—drafted with flexibility for the unknown future (laws, assets, and beneficiaries).
- Administration (The Practice): This occurs after a death. It’s where the actual facts of the estate are imprinted onto the blueprint, choices are made, and assets are legally distributed.
An experienced administration attorney often uses lessons learned from settling estates to inform and improve their estate planning documents, ensuring fewer “wrinkles” and “holes” in their future clients’ blueprints.
Pitfalls of DIY Trust Administration
Many trustees, in an effort to simplify the process or save money, attempt to handle the trust administration themselves. This is where disaster often strikes, as simple oversights can lead to expensive, stressful legal conflicts years down the line.
Here are two classic, costly mistakes made by people who try to go it alone:
Mistake 1: Ignoring Notice and Accountability
Failing to properly notify all potential beneficiaries and providing a formal accounting can unravel an estate distribution years later.
“A woman’s mother died about six years ago… she distributed the accounts and now six years later she gets a letter from an attorney representing the nephew saying hey you didn’t give us notice, you didn’t give us an accounting…”
Simple professional guidance at the time of death would have made all the difference, providing the necessary documentation and proof to protect the trustee from this six-year-later anxiety and legal threat.
Mistake 2: Missing Crucial Tax Planning Deadlines
This mistake is often made when an attorney didn’t draft the original plan, or the original attorney is no longer available. Families believe they’re fine because the assets were distributed, but they missed a crucial step after the first spouse passed away.
- A high-net-worth couple failed to do any administration after the first spouse died years ago.
- When the second spouse died, the child-trustee realized they were facing a potential multi-million dollar estate tax liability.
- The solution? An effective administration attorney was able to go back, recreate what should have been done years ago (the appropriate trust split), eliminating the entire estate tax bill.
This example proves that effective trust administration doesn’t just manage; it can be financially transformative and easily pay for itself.
Immediate Steps to Take After a Death
When a loved one who had a trust (the “settlor”) passes away, the trust immediately becomes irrevocable. The trustee must act promptly.
Here is the checklist of initial actions a professional will take:
- Notification: Send official notice to all required parties, including every named beneficiary and anyone who would have inherited if there had been no plan (potential legal heirs). This is a critical legal step because the Probate Court always looks to see if proper notice was given.
- Asset Inventory and Control: Immediately identify all existing assets and liquidity.
- Transferring Title: Get the successor trustee legally “on title” so they are empowered to act on behalf of the assets, pay bills, and manage the estate. The sooner the better, to prevent lapses in time for caretaking the assets.
- Tax Determination: If the estate is large enough to require a federal Estate Tax Return (Form 706) because it’s over the exemption, that document becomes a road map for the entire administration and must be filed within 9 (or 15) months of the date of death. This requires formal appraisals.
The sooner a trustee engages an attorney, the smoother this critical transition will be, preventing lapses in bill payments and property management.
Handling Unique and Complex Assets
Not every estate simply involves a house and a bank account. In Los Angeles, estates often include unique assets that require specialized handling, such as businesses, out-of-state property, or unique collections (e.g., art or international investments).
- Specialized Appraisal: For unique assets, especially in high-value estates, securing a specialized appraiser early in the process is critical, particularly because of the short timeline for filing the estate tax return (if required).
- Management Strategy: The trustee needs professional help to determine how to manage the asset. If it’s a limited partnership investment or a piece of real property out of state, the attorney helps coordinate the necessary steps (e.g., talking to the manager or securing local management).
Handling trusts and estates requires common sense problem-solving across various domains, including real estate, tax, and intellectual property.
Key Takeaways: Your Administration Checklist
- The Blueprint is Not Enough: The estate plan is the blueprint; administration is the necessary practice. Failing to administer, even with a trust, creates legal and financial risk.
- The Power of Notice: Notice is the single most important step in DIY administration. Ensure every person required and entitled to notice receives it to prevent future legal challenges.
- Fix Joint Tenancy Issues: If a property is owned in joint tenancy and one person dies, doing nothing creates a major probate mess upon the second death. File the death certificate to clear title immediately.
- Hire a Professional: In probate, attorney fees are statutory, meaning the price is set by law. You might as well hire a good attorney who will pay for themselves by providing guidance, managing tax implications, and preventing costly litigation with beneficiaries.
- Creditor Risk: If the family takes no action after a death, creditors to the deceased can initiate the probate process themselves to claim assets.
Notable Quote:
“The estate plan is the blueprint; the administration is putting it into practice.”
Watch The Full Interview Now:
📇 Connecting with David Soffer:
LinkedIn: https://www.linkedin.com/in/david-soffer-30040323/
Website: https://www.sofferlawgroup.com/
DISCLAIMER: The Probate Realtor® Matias Baker Masucci is a licensed real estate broker in California, DRE # 02054763. Any legal information provided is for informational purposes only and NOT to provide legal advice. Contact an attorney to obtain advice on any specific legal issue or problem. We make no guarantees as to the accuracy of any information.
