5 Steps in the Trust Administration Process

Administering a trust is a huge responsibility. Trust administrators have much on their plate and can often be overwhelmed by their to-do lists. It is no wonder that so many trust administrators make trust administration mistakes that expose them to liability. Before accepting trusteeship, it is important that you understand your responsibilities and what is expected of you.

As a trust administrator, you are required to take these steps in order to properly administer the trust. Here are some starting points from Johnston & Associates Law to help you understand the responsibility of administering a trust.

Collect and Review All Trust Documents

Collect and carefully review all trust documents to gain an understanding of the type of assets held in the trust. Before starting to collect trust documents, get multiple copies of the settlor’s death certificate from the funeral home.

Obtaining a death certificate from a funeral home can be a time-consuming process, so it is important to file a request as soon as possible. Once you have reviewed trust documents, you will have a clear understanding of discretionary provisions and trustee powers and will also be able to determine if separate shares need to be created.

Secure and Value the Assets

Now that you are aware of all the assets held under the trust, take an initial inventory and value the assets. Make sure all the assets are accounted for. If the trust is entitled to any death benefits such as life insurance or retirement accounts, review beneficiary designations. You will be required to provide the original certified copy of the settlor’s death certificate in order to transfer title in your name as trustee of the trust.

Notify Beneficiaries and Creditors

As a trustee, you are responsible for notifying trust beneficiaries. After you assume fiduciary responsibility, you need to let the beneficiaries know that you’re in charge. Send letters to beneficiaries explaining trust provisions. Your letters to beneficiaries should include your name and contact information and deadline for court challenges. Let them know that they have the right to see a copy of the trust document. Next, send a notice to the creditors of the estate to file claims before or on the specified date.

Pay Any Debts and Back Taxes

After the death of a grantor, the trust becomes an irrevocable and a separate tax-paying entity, so it is important that you apply for a new tax ID number for the trust. If you are serving as executor of the estate, you are also responsible for filing a final tax return for the trust. Using the trust assets, satisfy creditor claims and pay any outstanding expenses.

Distribute Trust Assets

The final step in trust administration in Santa Rosa involves distributing trust assets in accordance with the terms of the trust. Be prepared to take tough decisions regarding discretionary distributions.

Need help administering a trust? Johnston & Associates Law has you covered. Our attorneys help trust administrators understand trust language and make the right decisions. To make an appointment with one of our legal experts, call (707) 545-6542.