What is Trust Administration?
While Trust Administration technically is the operation of a Trust by the Trustee from the day it is created, generally when Trust Administration is mentioned it is referring to the actions of a Successor Trustee taken over the operation of a Trust after the disability or death of the original Grantor and Trustee. It is quite common these days for people to create a Living Trust as part of their Elder and Estate Planning. The Trust is generally the primary document used to implement the individual’s plan and frequently is quite complex as it was drafted to handle numerous possible scenarios that might occur to the individual. When the original Trustee is no longer capable of managing the Trust or has died the individual or entity named by the Trust document then takes over the Administration of the Trust as the Successor Trustee.
If you have been named as a Successor Trustee and are in need of assistance in administering the Trust, then call the Law Office of James C. Siebert & Associates, P.C. /Elder Law & Estate Planning Attorneys of Illinois, P.C. at (847)253-7500 today to schedule an appointment with an experienced Elder Law Attorney.
If you are named as the Successor Trustee the first thing that you should do upon becoming Trustee is to obtain the original or a copy of the Trust and read it. It is essential that the Trustee understand the trust document as that document outlines the responsibilities of the Trustee and the operational terms of the Trust, and the Trustee is required to follow the terms of the Trust. The Trustee is a fiduciary, and as such the fiduciary must act solely in the interest in the beneficiaries and not in the interest of the fiduciary. The Trustee must put the interests of the Trust and its Beneficiaries above his own and must avoid any conflicts of interest. It is very important that a Successor Trustee retain the services of an experienced Attorney to assist the Trustee in understanding the requirements of acting as Trustee and to prepare the documents necessary to the proper administration of the Trust.
TRUST ADMINISTRATION ON DEATH
A trust administration is NOT a court-supervised process, yet its ultimate goal is also the transfer of property from an individual who has died (the “decedent”) to that individual’s beneficiaries who are identified in the trust. To protect the successor trustees, there are many things that must be done to ensure proper administration. Fortunately, working with an attorney for trust administration is a straightforward process that will give the successor trustees a great peace of mind throughout the administration.
What does the Successor Trustee have to do upon the death of the original Grantor Trustee, unfortunately there no one set of items every Trustee is responsible there are some common denominators. The reason not all trustees will be required to do the same tasks is because each estate is different. This could be due to the type of assets, the ages of the beneficiaries, or due to the instructions the Grantors left in the trust itself. In general, a Trustee must:
♦ Follow the terms of the legal Trust: The trustee must read and understand the trust document to know what the creator set forth. The trustee must follow the requests outlined in the document. This may involve making regular payments to the beneficiaries for their education, medical, and/or living expenses as set forth in the trust.
♦ Act in the best interests of the Trust:
♦ Inventory Trust assets, debts, expenses and ongoing bills.
♦ You will need to make records of all of your expenses as trustee. This is a very important task that can’t be taken lightly. As trustee, you have a fiduciary responsibility to the trust beneficiaries, and they have a legal right to look over your shoulder, and if they ask, you will need to give them a written accounting of your financial activities involving the trust.
♦ Safeguard the Trust Assets: The trustee is expected to invest the assets of the trust to protect the value of the trust.
♦ As successor trustee, it is your obligation to pay the settlor(s) valid debts and to satisfy any tax liabilities owed. Taxes can be especially tricky, as there may be estate taxes owed in addition to income taxes, if the estate is large enough. As successor trustee, you will be responsible for filing the last income tax returns for the decedent. You may also have to file fiduciary tax returns. Because a successor trustee may be held personally liable for unpaid taxes, you will want to work with your attorney and accountant to make sure that all tax liabilities are satisfied prior to distributing the trust assets to the beneficiaries of the trust.
♦ Distributing the trust assets to the beneficiaries after all of the above has been completed.
One disadvantage of a trust administration as compared to a probate proceeding is that there is no court supervision of the process. If a dispute arises between beneficiaries regarding the distribution of property, it is more difficult to resolve without resorting to the court for assistance. Another disadvantage is the longer period of time during which the decedent’s creditors can file claims against the trust for payment of the decedent’s debts.
You don’t have to do this alone. That is what a good estate planning attorney and CPA are for. The best thing to do is to visit an experienced estate planning attorney that offers trust administration services to help guide you through the process and your role as Trustee. This is of particular importance where you have disputes among the beneficiaries or where there is a concern about a dispute based upon who and who is not to receive under the Trust and in what amounts. The Law Office of James C. Siebert & Associates, P.C. /Elder Law & Estate Planning Attorneys of Illinois, P.C. has assisted numerous Successor Trustees in handling the Trust Administration in both complex scenarios as well as those involving animosity among beneficiaries.
If you are a Successor Trustee, either before or after the death of the individual who established the Trust, and you have any concerns regarding the proper administration of the Trust, the Law Office of James C. Siebert & Associates, P.C. /Elder Law & Estate Planning Attorneys of Illinois, P.C. would be happy to assist you to make sure the Trust is properly administered and that you do not incur any liability for innocent mistakes while acting as the Successor Trustee. Call (847)253-7500 today to schedule an appointment.