Hyden, Miron & Foster, PLLC Law Blog

Friday, November 20, 2020

What Is Trust Administration?

Many people talk about probate and administration of an estate after someone has passed away. Trust administration is not as often discussed. In fact, it is all too common for people to have the misbelief that trusts do not require administration, at least not the same detail of administration as estates. Trust administration, however, has many steps and requirements. In fact, trust administration has many similarities to that of estate administration. There are, however, some significant differences as well.

What is trust administration?

Trust administration refers to the management of a trust estate through the distribution of trust assets to the beneficiaries as set forth in the trust agreement. While many people view trusts as a way to at least partially avoid probate administration, a notoriously lengthy and often expensive process, trust administration has many similarities. The differences, however, are important to note. For instance, while there are several instances that require appearing before a judge during probate administration, this is not the case with trust administration.

The fact that appearances before a judge are not required throughout the trust administration process makes a big difference. It allows for trust administration to move along quicker and smoother than probate. The process of trust administration can move along at the pace the trustee can manage as opposed to one that must wait for the courts to be able to keep up with. In fact, trust administration can be wrapped up in about a month or so. Probate can take upwards of a year or more to complete.

Trust administration essentially involves three main steps to be accomplished by the trustee. The first of which is getting control of the assets. This involves gathering the assets that are held in the trust as well as notifying the trust beneficiaries of the trust. The second step is the settling of the estate, which includes things like settling any outstanding debts and liabilities of the trust estate as well as filing the necessary tax returns. Proper records and an accounting of the trustee’s actions must also be kept. A properly title trust account must also be opened with a financial institution to hold the trust assets and may also involve employing professionals to assist in the trust administration process such as realtors, accountants, and attorneys.

The third main step is the distribution of the assets. The trustee is responsible for not only obtaining legal title to real estate and personal property held in the trust, but also seeing to it that the trust assets are properly distributed to the beneficiaries as set forth in the trust document. The distribution of trust assets to the beneficiaries should only happen after all the other steps of the trust administration have been completed.

The trustee of the trust can be an individual or corporate entity, such as a bank or other financial institution. The trustee of the trust is named in the trust documents. It is a great responsibility to be named as trustee and trustees can be held liable for mistakes made in the managing and distribution of the trust assets.

Estate Planning Attorneys

For help with trust administration, estate administration, estate planning, and all related matters in between, Hyden, Miron & Foster are here for you. Contact us today.

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