Trust Administration Checklist

A.Step One: Prepare for the First Meeting

□ 1. First Telephone Call
□ 2. Review the estate planning documents
□ a. Review the trust instrument
□ 1. General dispositive provision
□ 2. Powers of appointment
□ 3. Prorata or nonprorata distribution
□ 4. Disclaimers
□ 5. Estate tax clause
□ 6. Administrative trust clause
□ 7. Allocation of principal and income
□ 8. Prudent investor clause
□ 9. Reporting and accounting clause
□ 10. Trustee provisions
□ 11. S corporation issues
□ 12. Generation-skipping transfer
(GST) tax issues
□ 13. Power to divide trust
□ 14. Payment of interest
□ 15. Gift provisions
□ 16. Disqualified persons
□ 17. Ambiguities and drafting errors
□ 18. Asset schedule
□ b. Pour-over Will
□ c. Review other documents
□ 3. Prepare summary of estate planning documents

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B. Step Two: First Meeting with Client (Successor
Trustee)
□ 1. Identify the client and be aware of ethical issues
□ 2. Complete the new client information sheet
□ 3. Educate client about trust administration
□ 4. Summarize the trust and distribution process
□ 5. Collect asset information
□ a. Review title to assets
□ 1. Assets in trust
□ 2. Assets outside the trust subject to
distribution by will
□ 3. Assets outside the trust not subject to
distribution by will
□ b. Determine whether legal action is required
to collect assets into trust.
□ c. Estimate value of assets
□ d. Discuss need for appraisals
□ e. Identify need for investment advice and
make referral to broker
□ f. Identify dividend reinvestment accounts
□ g. Identify out-of-state real property
□ h. Identify depreciating or wasting assets
□ i. Identify assets subject to special regulatory
or contractual controls
□ j. Identify safe deposit boxes and arrange for
inventory
□ k. Discuss insurance coverage
□ l. Identify assets subject to options, escrows,
or foreclosures
□ m. Identify hazardous waste problems
□ n. Have client sign authorization forms
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□ 6. Collect liability information
□ a. Determine nature and amount of outstanding
liabilities
□ b. Identify potential creditors and outstanding
lawsuits
□ c. Discuss liability of trust for decedent’s debts
□ d. Discuss optional creditor’s claim procedure
□ e. Consider 1-year statute of limitations
□ 7. Collect beneficiary information
□ 8. Review document list
□ 9. Discuss fiduciary duties
□ a. Source of trustee powers
□ b. Standard of trust management
□ c. Fiduciary relationship
□ d. Discuss optional creditor’s claim procedure
□ e. Anticommingling rule
□ f. Duty to defend the trust
□ g. Nondelegation of trustee powers
□ 10. Send Probate Code §16061.7 notice to
beneficiaries and heirs
□ 11. Reporting and accounting requirement
□ a. Duty to keep beneficiaries informed
□ b. Mandatory accounting requirements for
trusts established after July 1, 1987
□ c. Contents of account
□ d. Accounting on request of any beneficiary
□ e. Waivers
□ f. Recommend voluntary accounting even
when not required
□ g. Consider obtaining court approval of
accounting
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□ 12. Recordkeeping
□ 13. Principal and income law
□ 14. Discuss trust checking account and trust
transactions
□ a. Advise client to open trust checking account
□ b. Determine whether administrative expenses
already paid and arrange for reimbursement
□ c. Present client with list of administrative
expenses
□ 15. Discuss estate tax issues
□ a. Consider need to file IRS Form 706 and
state estate tax returns or extensions
□ b. Consider filing Form 706 even when not
required
□ c. Consider need for and timing of extension to
file and/or pay taxes
□ d. Discuss alternate valuation
□ e. Discuss special tax elections that might be
available
□ f. Identify property for possible prior property
transfer credit
□ g. Review prior gifts
□ h. Identify assets includable although not
otherwise inventoried
□ i. Determine need for state estate tax returns in
states other than state of domicile
□ j. Consider GST issues

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 □ k. Consider disclaimer planning
□ i. To reduce or eliminate marital gift
to fully use unified credit
□ ii. To create a marital deduction
□ iii. To perfect or increase charitable
deduction gift
□ iv. To avoid general powers of
appointment
□ v. To skip a generation
□ vi. To qualify stock redemption under
IRC §303
□ vii. To eliminate nonqualified heirs to
qualify for IRC §2032A
□ viii. To avoid multiple administrations
and unnecessary estate taxes
□ iv. To terminate a trust
□ v. To avoid income taxes
□ vi. To accelerate estate tax to qualify
for PTC credit
□ l. Consider need to coordinate with insurance
trust for payment of estate taxes
□ 16. Discuss income tax issues
□ a. Allocate responsibility for decedent’s
personal returns and fiduciary returns
□ b. Determine what returns need to be filed
□ c. Explain basis step-up

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 □ d. Determine whether to use administrative
trust
□ i. Terminate trust approach
□ ii. Administrative trust approach
□ iii. Factors in deciding
□ e. Is the trust simple or complex?
□ f. Accumulation of income permitted
□ g. Trusts must report on calendar-year basis
□ h. Discuss income tax brackets for trusts
□ i. Consider timing of distributions (65-day rule)
□ j. Discuss need to issue IRS Form 1099s
□ k. Personal exemption
□ l. Quarterly estimates for trust
□ m. S Corporation
□ n. Passive loss deduction
□ o. Income tax consequences of funding bequests
□ i. Nonprorata distributions from trust
□ ii. Types of bequests and tax consequences
□ p. Discuss trust income during administration
period
□ q. Have client sign IRS Form SS-4 to obtain TIN
for administrative trust
□ 17. Discuss real property tax issues
□ a. Determine whether “change of ownership”
occurs for property tax issues
□ b. Determine whether parent-child exclusion
available
□ i. Calculate and allocate the exclusion
□ ii. Application to ongoing trusts
□ iii. Determine time for filing parent-child
exclusion application
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□ 18. Discuss trustee compensation and time records
□ 19. Preliminary liquidity analysis
□ 20. Discuss fees, costs, retainer, and fee agreement
C. Step Three: Actions Following First Meeting
□ 1. New case set up
□ a. Set up new trust administration file
□ b. Prepare and mail fee agreement
□ c. Prepare joint representation agreement (applies
only if there are co-trustees)
□ d. Apply for TIN if using administrative trust
□ 2. Calendar critical dates
□ a. Lodge pour-over will with county clerk (30 days
from death)
□ b. Notification to beneficiaries (60 days from death)
□ c. Disclaimer deadline (9 months from death)
□ d. Form 706 and state returns (in CA: Controller’s
Office Form ET—1) (9 months from death)
□ e. Date of Form 706 extension, if any
□ f. Alternate valuation date (6 months from death)
□ g. IRS Form 709 (gift tax returns) (April 15th)
□ h. Decedent’s final personal returns (April 15th)
□ i. Fiduciary income tax returns (April 15th, if
calendar year; 15th day of 4th month after fiscal
year end if fiscal year)
□ j. Preliminary Change of Ownership Statement
(150 days from death)
□ k. Property tax installments (December 10th and
April 10th)
□ l. Survival requirements under instrument
□ m. 65-day election
□ n. Partnership basis election (IRC §663(b))
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□ o. Federal/state payroll tax reporting
□ p. S corporation election (within 2 months and 16
days of transfer)
□ q. Medi-Cal notice (90 days from death)
□ r. Probate Code §13100 affidavit (40 days from
death)
□ s. Option, escrow, or buy-sell dates
□ t. First trust accounting due (1 year from death)
□ u. Statue(s) of limitation on decedent’s cause(s) of
action
□ v. Creditor claim period (if opt in) (4 months from
date of first publication)
□ w. Statute of limitations on claims against decedent
(1 year from death)
□ x. Last day to contest trust (12-0 days from date
Probate Code §16061.7 notice is received, or up
to 60 days later if trust copy not sent originally)
□ y. Deadline for noncitizen spouse to transfer or
irrevocable assign assets to QDOT (due date for
filing Form 706, including extensions)
□ z. Deadline for noncitizen spouse to become citizen,
if not creating QDOT (due date for filing Form
706, including extensions)
□ aa. Beneficiaries take decedent’s minimum required
distribution if decedent has passed RBD (12/31 in
the year of decedent’s death)
□ bb. Determine beneficiaries of retirement plan or
IRA (9/30 in year after year of decedent’s death)
□ cc. Deadline for dividing retirement plan or
IRA into separate accounts (12/31 in the year
after year of decedent’s death)
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 □ dd. If trust is named as beneficiary of retirement plan
or IRA, send list of trust beneficiaries and a copy
of the actual trust instrument to plan
administrator or fiduciary (10/31 in year after
year of death of decedent)
□ 3. Lodge pour-over will with county clerk and obtain
certified copy
□ 4. Prepare and send Medi-Cal notice
□ 5. Prepare certification of trust and affidavit of death
□ 6. Prepare and file PCOR form
□ 7. Collect asset and liability information
□ a. Prepare preliminary inventory and mail to client
with sample asset list
□ b. Prepare and send letters to financial institutions
□ c. Prepare and send letters to insurance companies
□ d. Order deeds from title company for all real
property
□ e. Order appraisals for all parcels of real property
□ f. Order appraisals for tangible personal property
□ g. Order appraisals for intangible personal property
□ h. Order appraisals for business interests
□ i. prepare and send letters re: retirement benefits
□ j. Enter data into asset allocation spreadsheet and
fiduciary accounting program
□ 8. Prepare forms for creditor claim procedure
□ 9. Record certification of trust in each county where real
property located
□ 10. Prepare and send IRS Form 4506 requesting copies of
gift tax returns
□ 11. Prepare and send information letters to beneficiaries
□ 12. Prepare and send trust administration memo
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□ 13. Prepare letter of instructions to brokers
□ 14. Deliver stock certificates to broker
□ 15. Prepare CPA designation form
□ 16. Communicate with out-of-state counsel for ancillary
proceedings
□ 17. Prepare and file parent-child exclusion application
□ 18. Determine need to start court proceedings and prepare
petitions
□ 19. Prepare documents to collect nontrust assets
□ 20. Corporate review and housekeeping for closely held
corporation
□ 21. Communicate with CPA
□ 22. Cancel decedent’s credit cards and contact national
credit reporting agencies to close decedent’s credit
profile
D. Step Four: Second Meeting with Client (and CPA)
□ 1. Verify trust checking account established
□ 2. Review client’s recordkeeping
□ 3. Discuss progress on collection and appraisal of assets
□ 4. Discuss possible sales of assets
□ a. Determine need for liquidity
□ b. Consider preference for cash versus in-kind
distributions
□ c. Review trustee’s authority to sell
□ d. Consider tax consequences of sale
□ e. Discuss method of sale
□ f. Watch for conflict of interest
□ g. Consider obtaining court approval

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□ 5. Consider preliminary distributions
□ a. Consider income tax effects
□ b. Beware of disproportionate preliminary
distributions
□ 6. Prepare and send letter to CPA confirming allocation
of responsibilities
E. Step Five: Final Distribution
□ 1. Finalize asset collection
□ 2. Finalize fiduciary accounting schedules
□ 3. Determine administration expenses incurred
□ 4. Decide whether to take administration expenses on
Form 706 or IRS Form 1041
□ 5. Finalize and file Form 706/state tax returns
□ 6. Draft trustee’s final account and report
□ 7. Determine whether court approval of accounting
appropriate
□ 8. Consider timing of distribution
□ 9. Consider income tax effects
□ 10. Analyze available assets
□ 11. Determine whether distribution will be pro rata or
non-pro-rata
□ 12. Determine whether any distributions carry earned
income or interest
□ 13. Determine amount of reserve
□ 14. Determine amount of trustee’s fees
□ 15. Select allocation (distribution) date
□ 16. Update values of assets and amounts of liabilities as of
distribution date
□ 17. Prepare asset allocation spreadsheet
□ 18. Prepare written schedule of assets for ongoing trusts
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□ 19. Obtain TINs for ongoing trusts
□ 20. Prepare certificates of trust for ongoing trusts
□ 21. Prepare diagram of distribution
□ 22. Send drafts of spreadsheet, asset schedules, and
diagram to client and CPA
□ 23. Consider review of distribution plan by beneficiaries
□ 24. Consider court approval of distribution plan
□ 25. Obtain trustee’s and CPA’s approval of distribution
plan
□ 26. Prepare transfer documents for funding distributions
a. □ Written instructions to trustee re title to bank
accounts
b. □ Deeds, etc.
c. □ Assumption of mortgages
d. □ Assignments of lease
e. □ Assignments of notes and deeds of trust
f. □ Prepare and file UCC-2 statements
g. □ Cancel old and issue new stock certificates for
closely held corporations
h. □ Assignments of partnership interests
i. □ Assignments of unsecured promissory notes
j. □ Letters to makers on notes advising of
assignments
k. □ Assignments of assets of sole proprietorship
l. □ Assignments of personal property
m. □ Forms to complete transfer of mobilehomes
n. □ Stock powers, affidavit of domicile, and letter of
instructions for stock transfers
o. □ Letters to transfer agents or deliver certificates to
broker for transfer

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 p. □ Letters of instructions to broker to transfer
securities accounts
q. □ letters of instructions to mutual fund companies
for transfer of accounts
r. □ Transfer forms for Treasury notes and bonds
s. □ Letters and forms for transferring United States
Savings Bonds
t. □ Complete transfers of vehicles (cars, boats,
airplanes)
u. □ Miscellaneous assignments for other assets
□ 27. Prepare waivers of accounting if no formal accounting
□ 28. Prepare beneficiary receipts
□ 29. Mail accounting, distribution checks/documents, and
receipts by certified mail/return receipt requested
□ 30. Prepare letter of instructions to client re administration
of ongoing trusts
□ 31. Prepare letter to CPA re ongoing trusts and allocation
of responsibility
□ 32. Send closing packet and termination-of-engagement
letter to client
□ 33. Send client-satisfaction survey form to trustee

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