What is a trust administration?
What is a trust administration? Trust administration is when the terms of the trust are “administered,” or carried out. Typically, this happens when someone dies or becomes incapacitated.
For example, if a married couple has a joint trust, and one spouse dies, then what needs to happen? That’s determined by the trust. If the couple has a survivor’s trust, then it’s possible there’s not much to be done (depending on assets, and several other factors). However, if the couple has an AB trust or ABC trust, then there will need to be an assessment of assets, a split among different trusts, and various other things — again, depending on the terms of the trust. When the second spouse dies, then the trust is administered again, at which point everything goes to the beneficiary (recipient) of the trust. That’s when the kids split the assets or the neighbor gets the dining table, etc.
To give another example, if one person has a trust, then the trust must be administered at the time that they die.
Caveat: there are other types of trust that require ongoing administration. Contact me to discuss!
Who administers the trust? The trust is administered by the Successor Trustee AKA the financial agent. That person is responsible for making sure that the terms of the trust are carried out. Usually, the trustee retains an attorney to help them do that and make sure that they comply with certain deadlines.
The key responsibilities of a trustee during trust administration typically include:
Asset management: The trustee manages and invests the assets held within the trust, ensuring they are protected and grow in value.
Record keeping: The trustee maintains detailed records of the trust's assets, transactions, and any distributions made to beneficiaries.
Communication with beneficiaries: The trustee communicates with the beneficiaries, keeping them informed about the trust's administration, providing account statements, and addressing any concerns or questions they may have.
Compliance with legal and tax obligations: The trustee ensures that the trust adheres to applicable laws and regulations, files tax returns on behalf of the trust, and pays any necessary taxes.
Distribution of assets: Based on the instructions outlined in the trust document, the trustee distributes assets to the beneficiaries according to the specified terms, conditions, and timelines.
What is required in a trust administration varies drastically depending on what the trust says. It’s best to contact me to discuss your specific circumstances.