What Is Trust Administration?
Through the creation of a living trust, a person can protect his/her assets from the probate process upon death, saving loved ones the time, the expense, and the public exposure of a long, drawn-out legal proceeding. Probate is a legal process through which a deceased person’s assets and debts are handled, and it should generally be avoided due to its cost, extensive court paperwork, and exposure to the public. Unlike probate, the creation and administration of a living trust is usually private. The trust administration process is used to pay off creditors and distribute assets from an estate to the designated beneficiaries.
In California, a successor trustee—often a close friend or family member of the person who created the trust—is granted the authority to act on the person’s behalf and becomes responsible for managing the assets held within the trust. Serving as a trustee during a trust administration involves many important responsibilities, such as filing income tax returns, managing those investments held by the trust, and maintaining communication with the beneficiaries on a regular basis.
Not only does the trustee have a fiduciary duty under California law to perform their role in accordance with the trust’s terms for the benefit of the beneficiaries, but they also can incur legal liability if they mishandle their responsibilities. As you can imagine, being a trustee comes with plenty of paperwork during a trust administration.
Understanding and fulfilling the responsibilities imposed on a trustee by California law and the trust itself can feel overwhelming, but an experienced trust administration attorney can guide you through the process and help you come to a firm understanding of your new role. With expert guidance, you can eliminate a lot of stress and uncertainty. Trust administration lawyer Lorilee DeSantis can help you perform your trustee duties correctly. Trustees often need guidance on:
- What records they need to keep and how to maintain those records
- What information they need to provide to beneficiaries
- Strategies and legal options available to resolve problems
- Navigating court proceedings
- When and how to modify or terminate a trust
- Determining appropriate and lawful trustee compensation
What Are The Steps In The Trust Administration Process?
Every trust administration is a little different because the terms of a particular trust will in part determine what steps must be taken. However, in general, the basic steps of a trust administration include the following:
- Read the trust to determine the extent of the trustee’s responsibilities.
- Determine if the trust should be modified in any way or if there are any ambiguities in the trust’s language which need clarification. Sometimes there are problems with the trust that need to be resolved before the real administration can begin. Those problems may be resolved with or without the court, but either way, they should be resolved ASAP.
- Obtain a tax identification number (aka employer identification number or “EIN”) so that the tax authorities know that this particular trustee is serving as trustee of this trust.
- Inform certain persons of the existence of the trust (for example, beneficiaries and nominated successor trustees).
- Create an inventory of the assets and debts.
- Protect and manage the assets in the trust. This requires the trustee to transfer title to his/her name as trustee of the trust. The trustee will also need to ensure the assets are properly insured and set up a bookkeeping system to track the trust income and expenses.
- File the deceased person’s tax returns; pay taxes owed.
- File fiduciary income tax returns.
- Give information to the beneficiaries about income and expenses that flow into and out of the trust (usually done in the form of an accounting).
- Keep beneficiaries reasonably well-informed about what the trustee is doing to administer the trust. This is an important part of managing beneficiaries. Beneficiaries tend to get suspicious when they feel like the trustee is not being forthcoming with information about what is going on.
- Ultimately distribute the assets to the beneficiaries.
There is a lot to know to be a competent trustee, and it is very common for trustees to make mistakes–and fail to follow the law–without even knowing it. Working with an attorney who is experienced in trust administration can be a great way to:
- Become informed about what the law requires from a trustee
- Learn how to best fulfill the responsibilities that come with the trustee’s job
- Help the trustee prepare the required paperwork
Will A Trustee Be Compensated For Their Role?
In the state of California, a trustee can usually be paid for the work they perform in their role administering the trust. The fee depends on the circumstances of the particular trust. Generally the trustee may charge a reasonable hourly rate or a small percentage of the trust assets, though many waive this fee if they’re also a beneficiary.
Lorilee DeSantis is a seasoned trust administration attorney who can help you determine appropriate compensation based on your particular situation.
Trust Administration Guidance For Santa Rosa, California— DeSantis Law Group
Trust administration lawyer Lorilee DeSantis has dedicated her career to helping families through challenging moments, including administering trusts after the death or incapacitation of a loved one. At DeSantis Law Group, we take the time to get to know each of our clients and their backgrounds so that we can better address any concerns they may have and ensure our work supports their unique objectives.
DeSantis Law Group is a full-service firm; our guidance in trust administration will continue year after year, including each tax season, which is why we strive to build trust and emphasize clear, regular communication with each of our clients. Your initial consultation is not just the beginning of another case for our firm: it’s the foundation of a long-lasting relationship.
- Our Approach
- What goals should proper estate planning accomplish?
- What exactly is a will? Does a will need to be a part of every estate plan?
- What are the other key components used in effective estate planning?
- What are the different types of trusts available to use and their purposes?
Schedule Your Consultation Today
With DeSantis Law Group representing you, you’ll become part of our team as we help you carry out your trustee responsibilities and work for the benefit of all beneficiaries, per California law. We’ve helped many people right here in Santa Rosa, California, successfully administer trusts and distribute assets to everyone’s satisfaction.
Now, let us help you. Schedule your consultation with trust administration expert Lorilee DeSantis today.
For more information about How to Administer a Trust, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (707) 900-4500 today.
The ideas discussed in this article are for general informational purposes only and should not be construed as legal advice. The reader should consult with an attorney to determine what is in the reader’s own best interest.