Surviving Spouses and their Trusts
November 21, 2018
Many people believe that when one spouse dies, nothing needs to be done to “settle”or “administer” a trust. NOT TRUE. Settling or administering a trust refers to the things that must be done when the first spouse dies. Sometimes there are only a few things that need to be done and at other times it is more complicated.
If a spouse has passed away, the surviving spouse must settle the trust to show the IRS which property belonged to the deceased spouse and which property belonged to the surviving spouse. This is important to ensure that the surviving spouse’s property will not be taxed upon their death.
For spouses who passed away in 2016, the settlement process was not complicated. The same applied for those spouses who passed away in 2011 or later if their estates were worth less than 5 Million dollars. Many clients chose not to allocate their assets to Trust A and Trust B if it was what is referred to s a disclaimer trust. Nonetheless, it was still important for the surviving spouse to settle their trusts even without an allocation. Typical tasks include:
– Obtaining a death certificate
– Inventorying the estate
– Appraisal of assets
– Lodging a will
– Clearing title to trust assets
– Obtaining a tax identification number
– Giving notice to the Department of Health Services
– Filing an Estate Tax Return
NOTE: If your trust is older than 2005, it may contain language requiring a mandatory distribution to Trust B. The majority of our clients who have older trusts amend to change this provision. If your spouse has not passed away, you have an older trust, call us and we will schedule a consultation to review your trust documents to ensure that they are consistent for your wishes. If your spouse has passed away and you have not settled your estate, contact our office to schedule a consultation by calling (310)348-2995.