What Do You Need to Know about Trust Administration?

Have you been named as a trustee in someone’s trust documents? Are you the beneficiary of a trust? Maybe you are simply considering creating a trust on behalf of beneficiaries you will name. Either way, you should know what you need to about trust administration.

What is Trust Administration?

Are you wondering about trust administration? A legal trust is created when an individual writes a trust document putting the management of his assets in the hands of another person, called the trustee. The trustee’s job, then, is to manage these assets for the beneficiaries of the trust, often a spouse or the children of the individual writing the trust document. The trustee manages these assets according to specific instructions set forth in the trust document.

“Trust administration” is the term for the trustee’s management of an estate per the trust document. Trust administration begins as soon as a trustee steps in and follows the instructions given in the trust document. This job can be complicated. It often requires legal advice to make sure you are carrying out the terms of a trust document legally in accordance with the terms set out in this document.

What are a trustee’s duties?

A trustee has four basic duties in administering any trust. A trustee is expected to: 

  • Follow all written terms of a trust. This requires that a trustee read and understand all the wishes of the person who wrote the trust document. The trustee will then perform the instructions given in the trust document. This may involve such tasks as making payments on behalf of the trust’s beneficiaries for things like education and medical expenses.
  • Safeguard the trust’s assets. An important role that the trustee is expected to fill is to invest the trust’s assets in order to protect the value of the trust.
  • Pay taxes and any other expenses: Any bills and taxes on trust income must be paid out by the trustee.
  • Act in the best interest of the trust and its beneficiaries. A trustee is expected to put the good of the trust ahead of his own interests. He may not use the trust to his own benefit or make loans to himself from the trust. Basically, he should avoid any conflicts of interest. In fact, it may be inadvisable for a trustee to hire himself or his family members on behalf of the trust. Any such actions should be discussed with an appropriate attorney before hand to make sure the actions are prudent and legal.

If you’ve never before engaged in trust administration, this may seem like a lot to be expected to perform. It is. This is why it’s recommended that you seek legal counsel and support if you are in a position where you have been named or are likely to be named as a trustee.

Trust administration is complex. If you’ve been named as a trustee in any trust documents, it is highly recommended that you seek legal assistance before stepping in to assume this role of trustee. Part of your job is to avoid any actions that could be perceived as conflicts of interest and, thus, be legally actionable. This, in part, is why legal advice and support is an important piece of trust administration.

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