A revocable or living trust can be used to plan for someone’s estate when he or she dies or becomes incapacitated. Such trusts are often created to help avoid probate, which is often costly, lengthy, and public.
To ensure that the provisions of the trust are carried out according to the trust’s specifications and the law, the successor trustee designated by the trustee is often aided by a trust administrator.
The administrator has a fiduciary duty to administer the trust in the best interest of the beneficiaries. To do this, the administrator takes a number of steps depending on the specific circumstances of the trust.
Here’s an overview of some of the many responsibilities of the trust administrator:
When the creator of the trust dies, the administrator, working with the trustee, ensures that the trust is fully funded. This means making certain that all real property, investment accounts, and other assets are accounted for within the trust itself. If the trust was not updated regularly while the creator was alive, the decedent may have accumulated assets not taken into consideration when the trust was created.
A trust administrator is responsible for overseeing the investment of assets, making prudent investment decisions, and reducing risks on behalf of the beneficiaries.
The trust administrator will need to establish what debts or claims may be against the trust estate. The administrator will also pay ongoing bills associated with the trust assets, which will include any tax bills. The administrator will be responsible for keeping abreast of tax obligations, filing a fiduciary income tax return, and paying taxes on the trust estate until the assets are fully distributed.
A trust administrator is responsible for identifying all of the trust beneficiaries, notifying them of the trust’s existence, and informing them of their rights. The administrator will also explain how the trust is being managed and that the beneficiaries’ interests are being safeguarded.
Depending on the makeup of the trust and the ages of the beneficiaries, an administrator may be responsible for simply ensuring that the assets are sold and the proceeds split among the beneficiaries in the manner specified. This is an outright or lump sum distribution.
When some or all of the beneficiaries are minor children, the trust administrator may need to address a number of issues, including the distribution of principle in increments over a number of years. Forbes magazine offers an excellent guide to considerations about minors and inheritance.
Even if there are no minor beneficiaries, the trust may specify that assets be given out in increments that can stretch out for years.
If you need help with creating or administering a trust, or with other estate planning matters, contact Schmidt Basch, LLC, at (314) 721-9200.