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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 taxes (income taxes, property taxes, federal estate taxes, etc.); 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

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.

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