Regardless of the type of estate plan you have set up, if someone passes away, there are a number of matters that will need to be addressed. A trust sets up the terms for how a trustee should administer the affairs and assets of the deceased. Below are discussion points for some of the most common matters associated with the trust settlement process.
1.) Will
If there is an original last will and testament, it should be filed with the Register in Probate in the county of which the deceased was a resident prior to passing. Whether there is a trust governing disposition of assets or not, filing the original last will and testament is required under Wis. Stat. § 856.05(1).
2.) Debts
A creditor claims notice should be published in the newspaper to bar creditor claims after the notice period. (Of course, there are certain exceptions to what types of creditors’ claims would be barred which I am not going into here.) Debts of the deceased should be paid. Often, there are many medical expenses that have been incurred immediately prior to passing. Those types of expenses have priority to be paid and should be paid promptly. Likewise, funeral/burial expenses have priority (to be paid) and should be paid promptly.
3.) Credit Cards and Credit Bureaus
If there are credit cards in the deceased’s name, those companies should be contacted and provided a death certificate so that no additional charges can be made to those cards. Once those credit card accounts are settled and closed, all the deceased’s credit cards should be destroyed or discarded. Similarly, to avoid additional credit and fraud issues, the three credit bureaus (Equifax, Transunion, and Experian) should be notified of the deceased’s passing. This will prevent credit from being issued in the deceased’s name or with the deceased’s social security number.
4.) Real Estate
If there is real estate in the deceased’s name, the real estate will need to be transferred from the deceased’s name. The method used to transfer the real estate in the deceased’s name will depend on how the real estate is titled. For example, if the real estate is titled in the name of both spouses as survivorship marital property, a termination of decedent’s interest form will need to be recorded with the appropriate register of deeds office. If the deceased owned the real estate solely in his/her name, then someone will need to have authority to sign a deed to transfer the real estate. Usually this person is the personal representative who has been appointed by the register in probate to settle the affairs of the deceased. Alternatively, if real estate is titled in the name of the trust, then the trustee of the trust will have authority to transfer the real estate. Some trusts require the real estate to be distributed directly to beneficiaries or may require the real estate to be sold. There is no single sure-fire method to remove the deceased’s name from the real estate and/or to transfer the real estate to the deceased’s beneficiaries. If there is real estate in the deceased’s name, it is better to take care of this as soon as possible. Leaving real estate in the deceased’s name for many years will only make resolving the situation more complicated. If real estate tax bills are still coming in the deceased’s name, this is an indication that something needs to be taken care of. It is recommended that you consult your estate planning attorney to discuss how to address real estate titled in the deceased’s name or in the deceased’s trust to ensure the provisions of the trust are complied with.
5.) Bank Accounts
If there are bank accounts in the deceased’s name, you will need to know if: (a) those accounts have joint owners listed, (b) those accounts have any pay-on-death designations, or (c) those accounts are in the deceased’s name solely. If there are joint owners, then they are the owners of the account and the deceased’s name can simply be removed from the account. If there are pay-on-death designations, then those pay-on-death beneficiaries would own the account. If the bank accounts are in the deceased’s name only, a probate may be required to transfer those accounts to the deceased’s beneficiaries. If the accounts are in the name of the deceased’s trust, it is important to consult the trust document to make sure that the trust provisions are being followed. Some trusts may require distributions to beneficiaries or to other trusts created under the original trust.
6.) Appraisals and Date of Death Valuations
Generally, real estate in the deceased’s name or deceased’s trust should be appraised to obtain a date of death value. The reason to obtain an appraisal is to take advantage of the step-up in basis rule. The step-up in basis is an adjustment to the value of an asset (usually an appreciated asset) for tax purposes. When an asset is distributed to a beneficiary, the asset is usually worth more than what the deceased paid to acquire it. The appraisal will assign a new basis to the asset so that if the beneficiary later sells the asset during the beneficiary’s life, the beneficiary’s capital gains tax is minimized or eliminated entirely. In conclusion, by having reliable appraisals and valuations completed, the beneficiaries will be able to take advantage of the step-up in basis rule.
Some think that because they have a trust, everything happens automatically. However, the trust settlement process requires involvement in addressing matters such as debts, real estate, wills, and more. If you find yourself in need of help navigating this process, contact our estate planning attorneys at Anderson O'Brien Law.