If you’ve been named a successor trustee of a loved one’s trust, it can be overwhelming and a bit scary at first. There are many steps involved and you carry the personal liability of your fiduciary duty. However, we find that with the right knowledge and support by your side, the trust administration process can be smooth, simple, and stress-free. The team at Rilus Law is here to share an intro to trust administration, but if you still have questions, please give us a call today.

Are you serving as the successor trustee for a loved one? Download our Free Trustee Toolkit to guide you every step of the way! It includes a checklist, successor trustee acceptance form, trust inventory spreadsheet, trust distribution schedule spreadsheet, and video walkthroughs with our guidance and support delivered right to your inbox.

Trust Basics: Terms to Know

Trustors, trustees, and beneficiaries are the three key terms in trust administration. Each role has some connection to the trust's assets, yet they all have diverse duties in the process. As a successor trustee, you also need to understand fiduciary duty.

Trustor - the original creator of the trust.
Trustee - the named party in charge of managing the trust.
Beneficiaries - the heirs of the trust.
Fiduciary Duty - The legal duty of the trustee to administer the trust according to its terms, in good faith, and in the best interest of the beneficiaries.

What is Trust Administration?

Trust administration is the process of managing the assets contained within a trust. While the trustor is living, they typically are also the trustee. They retain full control and usage of their assets, and the trust acts as a form of asset protection. However, after the death of the trustor, the successor trustee assumes the role, and trust administration begins.

For instance, if a parent passes away when their child is still a minor, they might leave money and assets in a trust. Until the child is old enough to receive the funds, the trustee of choice will manage these funds. In a nutshell, trusts create a framework in which a third party can look after a person's possessions.

When Do You Need Trust Administration?

In most cases, trust administration occurs after the death of the trustor. The trustees are responsible for safeguarding the trust and serving the interests of the beneficiaries now that the trustor is no longer alive. Consulting with an experienced trust administration lawyer can be quite beneficial during trust administration. This can help you ensure that you follow all of the trust's requirements and fulfill your fiduciary duty.

What are the Steps of Trust Administration?

Typically, the trustee's duties include gathering assets, paying debts, and making final distributions. Nevertheless, depending on the details of the trust, this may be a long process with many steps.

Trust Administration Checklist for Successor Trustees

Prepare

You should carefully read the trust to ensure that you are familiar with the terms.

Additionally, you must make sure you are aware of your powers as a trustee.

Check for other estate planning documents, such as a will (especially if it is a “pour-over will” leaving assets to the trust).

To avoid having to provide financial institutions with the entire language of the trust, you should search for a certification or affidavit of trust.

Get organized! You will need several different documents for trust administration, such as the trust copy, multiple death certificates, bank statements, insurance policies, real estate information, and other crucial papers.

If you intend to seek payment for your services, you should record your hours, mileage, and any out-of-pocket costs.

Gather Assets

Now that you’re organized and clear on your role and the trust’s terms, you can begin gathering assets. Real estate, bank accounts, life insurance, retirement funds, stock portfolios, vehicles, and other personal property are examples of common trust assets. You will need records of all assets, copies of deeds, vehicle titles, account statements, the life insurance policy, and any relevant financial records. Also, you must gather records of any debts or liabilities.

Pay Obligations

Before you make distributions, you will need to fulfill obligations such as loans, credit cards, taxes, and any other bills. A death certificate and a copy of the trust are frequently requested by creditors.

One duty that shouldn't be overlooked is that the trustor will need to have a final tax return completed on their behalf. As a trustee, you may need to work with the personal representative to prepare and file a final income tax return. Additionally, this may involve consulting with a qualified CPA.

Make Distributions

Generally, once the trust's debts have been settled and the assets have been accumulated, you can make distributions to beneficiaries.

Personal Property - The trustor may have provided a personal property memorandum. This is a good starting point, as it may outline specific gifts to beneficiaries. For instance, it may outline who receives items of jewelry or collectibles.
Trust Accounting - After the personal distributions have been made, you can provide an accounting of the trust to the beneficiaries so they can see every asset and expense of the trust, as well as a projected amount that will be transferred to each beneficiary. This could entail asking for the accounting to be approved by each beneficiary before making distributions.
Final Beneficiary Distributions - After the beneficiaries approve the accounting, you can distribute the trust’s funds. Distributing the remaining assets following the trust's guidelines is the trustee's responsibility. Because every trust has its peculiarities and exceptions, it is crucial that you carefully read the provisions regulating distributions from the trust.

Rilus Law’s Trust Administration Services

Because every trust is unique, the list above may not cover every step necessary for trust administration. Depending on the terms of the trust, the process can be complex, time-consuming, and even confusing. If you’re unsure about any of the terms, steps, or your responsibilities as a trustee, it is best to consult an experienced trust administration attorney. The team at Rilus Law is a full-service probate, estate administration, and trust administration law firm. We offer a free Family Administration Session where you can meet with an attorney to get all of your trust administration questions answered. Call us today at 480-924-4424 to schedule your free consultation and gain clarity on your next steps as a trustee.

An Intro to Trust Administration