Trust Administration Doesn’t Have to Be Daunting

Trust administration in Santa Rosa involves managing the assets held under a trust and eventually transferring them to the beneficiaries. Many people think courts supervise trust administration, but this is not the case. The trust administrator, that is, the person appointed by the settlor to make decisions on their behalf, is responsible for managing the trust and transferring trust assets to the beneficiaries upon the dissolution of the trust.

Duties and Responsibilities of a Trust Administrator

There are several myths about trusts. Many trustees do not know what’s expected of them and may feel overwhelmed. A trustee is expected to carry out the following trust administration tasks:

  • Assessing the assets in the trust and calculating their value.
  • Deduct liability from the total worth.
  • Keeping records related to trust funds, expenses, taxes paid, and correspondence up to date. Beneficiaries have the right to view these records whenever they want.
  • Filing income tax returns.
  • Keeping beneficiaries informed; a beneficiary can ask the trust administrator to explain their steps to protect trust assets from market fluctuations.

A trust administrator should work to safeguard the interests of the beneficiaries. They must act in good faith and exercise reasonable care, skill, and diligence in administering the trust. Trust administrators should not use trust property for their benefit. They should remain impartial. That is, they should not favor one beneficiary over another. They have a duty of loyalty.

The Trust Administration Process

Trust administration can be manageable if you know how to manage a trust correctly for the beneficiaries. To help you chalk out a trust administration strategy, we have created a list of the steps involved in the trust administration process.

  • Read the trust to understand your rights and responsibilities as the trust administrator.
  • Determine if you need to amend the trust to resolve ambiguities or problems before the real administration can begin.
  • Obtain an IRS tax ID number for the trust.
  • Notify all the parties, including the beneficiaries, nominated successor trustees, and creditors, of the existence of the trust.
  • Take inventory of the trust assets and create a list of trust liabilities.
  • Protect and manage trust assets. The trustee should transfer the title to their name, insure the assets, and set up a bookkeeping system to record trust income and expenses.
  • File the settlor’s tax returns.
  • Maintain transparency. Explain how you manage the trust of the beneficiaries. Duly communicate any changes in your trust management strategy to them.
  • Distribute the trust assets per the trust document.

Can Trust Administrators Draw Remuneration?

A trust administrator may receive a salary from the trust fund. They are also entitled to reimbursement for costs incurred in the administration of the trust. Many trust administrators charge an hourly rate or a small percentage of the trust’s assets.

Whether you need help creating or managing your trust, Johnston & Associates Law has you covered. Our ability to develop innovative ways to shield trust assets from lawsuits sets us apart from other law firms in Santa Rosa. To make an appointment, call (707) 545-6542.