Trust Administration differs from a Probate. In an Ohio or Florida Probate, it is the Executor or Personal Representative who administers the Estate whereas in a Trust Administration, it is the Trustee’s responsibility. While administering a trust is private and the Probate Court is not involved, the trustee must comply with the terms of the trust, state law and federal tax to fulfill the trustee’s duties.
Have you been named as a Trustee of a trust? A Trustee has many duties as well as an ethical obligation to protect the trust assets and the interests of the beneficiaries.
When a person dies leaving a valid trust, a Trust Administration becomes necessary to carry out the wishes of the decedent’s as written in his or her trust. A trust is a contractual relationship in which trust assets are given from a Trustmaker to a Trustee. The person who created the trust, the Trustmaker, appoints a Trustee to administer the trust upon their passing and essentially distribute the assets to the named beneficiaries in the trust. A Trustee must act in their fiduciary capacity in the administration of a trust, which means the Trustee has an obligation to protect the trust assets and the interests of the beneficiaries.
The basic duties of a Trustee involve the collection, management, investment, and distribution of trust assets. It is also important to keep detailed records as well as prepare an accounting, an inventory, and possibly obtain appraisals. The principal source of Trustee powers and duties is the trust agreement itself, so it is important for the Trustee to be familiar with the terms of the trust. Another important set of duties relates to tax matters. Often times it is necessary to prepare a federal estate tax return (706), an income tax return (1041), and possibly afiduciary tax return. Our firm will be able to assist with all of the tax matters for the estate. We recommend all Trustees meet with one of our notably experienced Attorneys to determine if a tax return is necessary.
If someone exceeds their Trustee powers, they may be held liable for loss or damages to the trust Estate. A Trustee must carry out all Trustee activities personally; however, it is recommended that they hire attorneys, accountants, investment advisors, and others to consult with concerning the administration of the trust. Such advisors are usually paid through the assets of the trust, so there is normally no out of pocket costs to the Trustee. Our law firm will work with the Trustee and beneficiaries to have the trust administered in a timely and professional manner. We can offer peace of mind to the Trustee by making sure the terms of the trust agreement have been satisfied and that the beneficiaries cannot later sue the Trustee.
If you have been appointed as a Successor Trustee or are currently acting as a Trustee, contact us so that we can assist you in fulfilling your fiduciary duties.