While many factors will contribute to the success, or failure, of a trust, the choice of Trustee will be among the most significant of those factors. If you were recently notified that someone appointed you to be the Trustee of a trust, and you have never acted as a Trustee, you are probably feeling overwhelmed and unsure where to start. To help you get started, the Los Angeles trust administration attorneys at Schomer Estate & Wealth Advisors offer a trust administration checklist for the first-time Trustee.
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Trust Administration Basics
The Trustee’s overall job is to administer the trust. Administering a trust entails managing and investing the trust assets and following the trust terms, created by the Settlor, to achieve the stated trust purpose. The trust terms, which are found in the trust agreement, will dictate when trust assets are to be distributed as well as identify the beneficiary that is to receive the distribution. The trust may also provide details that direct how the trust assets are to be invested. The Trustee must abide by all trust terms unless a term is illegal, impossible, or unconscionable.
A Trust Administration Checklist for the Trustee
Because the trust agreement provides the framework for the administration of a trust, the trust administration process will never be identical for any two trusts. There are, however, some common trust administration functions and tips for the Trustee that apply during the administration of the average trust.
- Locate and review all estate planning documents. If the Settlor is recently deceased, get copies of all estate planning documents, such as the Last Will and Testament, life insurance policies, powers of attorney, and any other documents that might be connected to the trust you are administering. Review them thoroughly so that you understand how they are all connected.
- Read through the trust agreement several times. Take your time and read through the trust agreement several times. Unless you are familiar with the legal jargon, you may not understand everything right away – but you need to understand it all eventually.
- Retain the services of an attorney and financial advisor. Most Trustee’s retain an experienced trust attorney to help them administer the trust to prevent making costly errors. At a bare minimum, go over the trust agreement with an attorney to make sure you understand all the terms. Also, meet with a financial advisor who can help guide you regarding investing the trust assets.
- Transfer assets into the trust. Often, after the death of a Settlor, assets must be transferred into the trust from the Settlor’s estate. This should be done as soon after the Settlor’s death as possible.
- Create an inventory. Once you have transferred all known assets into the trust, create an inventory so you know what the trust owns, where the assets are located, and what they are worth.
- Establish a bank account. A trust is a separate legal entity for tax purposes. A trust also needs its own back account to pay trust expenses.
- Communicate with beneficiaries. Let the beneficiaries of the trust know that you are the Trustee and that you will be handling the administration of the trust. You have an ongoing duty to communicate with the beneficiaries and keep them updated on trust business.
- Keep detailed records. Everything you do as the Trustee should be well documented. This protects you in the event that questions arise regarding your role as Trustee, and it allows you to be compensated for acting as the Trustee.
Contact Los Angeles Trust Administration Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to fulfill your duties as the Trustee during the administration of a trust, contact the experienced Los Angeles trust administration attorneys at Schomer Estate & Wealth Advisors by calling (310) 337-7696 to schedule an appointment.
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