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Question:

I have a joint revocable living trust with spouse. Under its terms, when the surviving spouse passes, the trust becomes irrevocable with a corporate trustee appointed to provide distribution of trust income to daughter. Given that all our funds are now in the trust, how will the executor access them to pay final bills, etc. Is this something that needs to be written into the trust document, or somehow otherwise handled?

Response:

Yes it should be included, but it usually is. Typically, trusts used in estate planning include a provision either authorizing or requiring the trust to pay for trust administration costs, final bills, and estate taxes, if any. Here’s the language we use in our trusts:

My trustee may pay to my estate or to the tax authorities any taxes payable by reason of my death chargeable against the residue of my estate and any other debts of my estate or expenses of its administration and legacies under my will which, if paid by my executor, would reduce the residue of my estate, and, to the extent my estate’s assets are insufficient, my trustee shall so pay such taxes, debts, expenses and legacies.

If that’s not in your trust, I recommend amending it to include such a provision. But look closely. It may already be there in the boilerplate.

By the way, this can be a bigger issue if people use payable on death provisions in bank and investment accounts to avoid probate since these go directly to the beneficiaries. The personal representative must then rely on their cooperation to contribute to any final bills, tax payments or other expenses that arise in the course of the estate administration.

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