Trustee Duties: Your First Six Months After a Death

What to expect right after someone dies

If you're stepping into the role of trustee for a loved one's living trust, nobody expects you to start working the very day they pass. Most of the tasks tied to trusts and estates aren't urgent, and they can wait a couple of weeks while your family grieves and handles things like a memorial service. Still, within roughly a month, you'll need to begin. If the whole process feels like too much right now, this guide walks through the early responsibilities that come with the job.

• How a living trust works after death
• Getting started as trustee
• How closing a trust works
• Whether you'll need a lawyer

How a living trust works after death

A revocable living trust is a widely used estate planning tool that spells out who inherits your property once you're gone. Unlike a will, it lets your assets skip probate entirely. When someone sets up a living trust, they usually name themselves as trustee, meaning they control the property inside it while alive. They also pick a successor trustee, someone who steps in once they die. As long as the person who made the trust is living, the trust stays revocable, meaning they can change it, replace it, or cancel it entirely.

Once that person dies, the trust locks in and becomes irrevocable, so its terms can no longer be altered. Whoever was named successor trustee now takes charge, starting with an inventory of everything the trust holds, and eventually distributing that property to the people named as beneficiaries.

Getting started as trustee

Here's a rundown of the tasks you'll likely face early on. This list applies to most trusts, even simple ones:

• get death certificates (obtain 8–12 certified copies)
• locate the will and file it with the local probate court
• notify the Social Security Administration of the death
• notify the state Department of Health
• identify the trust's beneficiaries
• notify the trust's beneficiaries
• inventory the trust's assets
• protect trust property (for instance, securing and maintaining a house until it's sold or transferred)
• obtain a Taxpayer Identification Number
• retitle property into your name as trustee
• review the trust's investments
• build a record-keeping system
• arrange appraisals of assets, and
• settle outstanding debts.

Many of these steps are more manageable than they sound. The funeral home, for example, will typically order the death certificates for you and may notify Social Security as well. Aim for eight to twelve copies of the certificate — you'll need proof of death for nearly every task ahead, since financial institutions and other organizations won't act without it.

Keep in mind that any Social Security payment issued for the month someone died has to be returned, regardless of what day in that month the death occurred. This trips people up because Social Security payments arrive during the first week of a month but cover the month before. So a payment that lands in early April actually covers March. If the payments were direct-deposited into the deceased person's bank account, sorting this out can take a few months, so don't close that account right away.

When the executor and trustee aren't the same person

Most trust-based estates also include a will. (Even with a living trust in place, it's smart to have a backup or pour-over will to catch any property that never made it into the trust.) Often, one person handles both roles — executor of the will and trustee of the trust. But if you're the trustee and someone else is serving as executor, keep close communication with them throughout these early months. You need visibility into what they're doing and why. With a pour-over will, the executor moves the estate's remaining assets — anything not already titled in the trust's name — into the trust, at which point they become your responsibility.

Contacting the beneficiaries

Notifying beneficiaries is one of your first jobs. Start by reading through the trust document itself and listing out everyone it names. Trusts aren't always specific about this — some use broader terms like "children" or "issue" instead of naming individuals, and figuring out what those terms mean under your state's law can get complicated. If you have any doubt at all, talk to a trusts and estates attorney. Getting this step right matters a great deal.

To notify beneficiaries, send a straightforward letter explaining that the trust became irrevocable when the trust's creator died, that you're now responsible for the property inside it, and that distributions will happen as soon as practically possible. Some states set legal deadlines for this notification — often 30 or 60 days from the date of death.

Setting up a system to stay organized

Nearly everything you do as trustee depends on how well you track it. You'll need a clear picture of what the trust owned and what it owed. You'll also need to apply for a federal tax identification number from the IRS so the trust can properly report any gains or losses before the property gets distributed to heirs. Figuring out the value of everything the trust held at the time of death is another key task — this often means hiring appraisers and carefully reviewing account statements. And you'll need to keep an eye on incoming mail and pay bills as they arrive: funeral costs, administrative expenses like attorneys, cleaners, and tax preparers, and, if you're also acting as executor, personal debts such as credit cards or medical bills.

Your system doesn't need to be elaborate. If your only job is to gather the trust's assets, pay off debts, and hand over what remains to the beneficiaries, you probably won't need to track income and expenses for more than three to six months. You won't even need to file a trust tax return unless the trust earns more than $600 in income. For a fairly simple trust, organizing bank and brokerage statements chronologically, along with some notes, may be enough. But if you're managing a trust that will remain open longer than six months, it's worth investing in basic accounting software (such as Quicken) to track money moving through each account. That expense is a legitimate cost to charge to the trust. A few hours spent setting things up now will save you headaches later, especially at year's end.

Handing over the trust funds and property

Once the assets are inventoried and the debts are paid, you reach the part of the job most people associate with being trustee: distributing property to beneficiaries. After everything has gone out according to the trust's terms, it's also good practice to send beneficiaries a final accounting — a summary of every asset the trust held, its value on the date of death, and how and when it was distributed.

How does closing a trust work?

Because trust property bypasses probate, there's no official process or paperwork required to formally close a trust. Once every asset has been distributed, your job is essentially finished. That said, if the trust earned more than $600 in income or capital gains, you'll still need to file a trust tax return using IRS Form 1041.

How long a trust stays open after someone dies depends on a few things:

• whether you're managing an ongoing trust, such as one holding funds for children until they reach a certain age, or one that otherwise requires a longer distribution timeline
• whether the beneficiaries are cooperating, or whether disputes arise, and
• how complicated the trust's assets are, including whether anything needs to be sold.

If you're able to distribute everything to beneficiaries fairly quickly, most of the work will likely wrap up in under six months. For an ongoing trust, there's more ahead, but you'll still have tackled the biggest tasks within those first few months.

Will you need a lawyer?

If you're serving as successor trustee for a relatively straightforward trust — no complicated holdings like a family business, no estate tax issues, and no family members threatening to contest anything — you can likely handle the initial months of administration without a lawyer. Early on, the job is mostly about staying organized. Some tasks take a single phone call; others require hours of gathering paperwork, sending letters, and following up. Even so, it doesn't hurt to start looking for a trusts and estates attorney in case you need one later.

Down the road, when it's time to file tax returns, transfer real estate titles, fund any subtrusts, or make final distributions, paying for advice from an accountant or an attorney can be money well spent.

If you'd rather manage things on your own — or handle part of the work yourself to cut down on legal fees — that's entirely doable. Serving as trustee takes effort, but it isn't beyond most people's ability. With patience and care, you can carry out the role well. Specific requirements and deadlines vary by state, so when in doubt, check your state's rules or speak with a local attorney.