Trust Administration

Trust Administration

Trust administration involves overseeing and managing the assets held within a trust. Trusts are commonly created as an estate planning tool, and the Trustee oversees the distribution of trust assets according to the wishes of its creator.

You may be wondering:

  • My parents have died and their assets are held in their Revocable Living Trust. What are the first steps I need to take as Successor Trustee?
  • My brother has a Revocable Living Trust and is having difficulty managing his assets. When—and how—can I take over as Successor Trustee?
  • I’ve been named as Trustee of a Testamentary Trust for my young nieces and nephews. How can I fulfill my legal obligations as Trustee while meeting the needs and desires of the trust beneficiaries?
  • What tax obligations need to be considered now that my parents have died? What is the difference between fiduciary income tax and estate tax? What tax returns are required?
  • How can I make sure that all creditor claims have been paid before I distribute the trust assets to the beneficiaries?

Every trust involves at least three roles: the “Settlor” or creator of the trust; the “Trustee” or manager of the trust; and the “Beneficiary”—the person entitled to the use and benefit of the trust assets. The Trustee is responsible for managing and administering the trust according to the wishes of the Settlor. This means he or she is responsible for protecting the trust assets and ensuring that the Settlor’s plans for the assets are carried out.

Types of Trusts and The Duties of Administrating

The duties involved in trust administration vary depending on the nature of the trust created.

One type of trust frequently used to avoid probate is the Revocable Living Trust (“RLT”). After the Settlor of a RLT dies, the Trustee has a job similar to that of a Personal Representative in a probate (that is, the Trustee must gather the decedent’s assets, pay bills and taxes, and distribute the assets to the beneficiaries). The difference is that with a RLT, the court is not involved in the process. Generally speaking, this means that the estate can be settled faster and more affordably than with a probate. However, while the court requirements can be avoided, a Trustee administering a RLT has many of the same obligations as a Personal Representative in a probate. Assets must be gathered, valued and managed; beneficiaries must be kept informed; creditors have to be paid; tax returns have to be filed; and accountings to beneficiaries need to be prepared.

Another common type of trust is a “Testamentary Trust” for children, grandchildren, disabled loved ones, etc. These trusts are often included as part of a person’s Will or RLT to protect loved ones who are minors, disabled, or otherwise unable to manage assets. Instead of leaving a direct inheritance, money intended for a minor or disabled person often passes into a Testamentary Trust where it is managed by a Trustee. In some cases, these trusts are temporary, lasting only until a minor beneficiary reaches a certain age. In such situations, the trust administration involves protecting the assets until the child reaches the designated age and, in the interim, making distributions to the beneficiary as allowed by the terms of the trust.

There are many other types of trust including Special Needs Trusts, Irrevocable Life Insurance Trusts, Residence Trusts, etc. Regardless of the type of trust, serving as Trustee is a big job with serious legal implications. Properly administering a trust requires guidance from knowledgeable legal advisors.

Reach out to Us

We regularly represent Trustees in carrying out their fiduciary duties.  We have the expertise necessary to ensure you meet your legal obligations while keeping the trust beneficiaries happy.  We take the time to analyze your situation and offer solutions that are tailored to the specific trust in question. Call us today:

(503) 248-9535(503) 248-9535