Trust Administration

Most clients are aware of the probate process that may take place after death. In an attempt to avoid this process many will create a revocable living trust. Although such a trust may be instrumental in avoiding the probate process, a trust administration must take place in order to legally transfer assets. This process is generally far less expensive and far more efficient than probate. This procedure takes place in an attorney’s office and will take far less time than a probate would have.

Administration Process

The Administration process takes place after the death of the client and will follow two sets of guidelines. The first is the guidelines established in the probate code that we are required to follow by law. The second is the terms created within the trust establishing the order and duties of the trustee upon death. Trust administration poses challenges based upon the particular circumstances of each estate. If it is a husband and wife, an administration must take place upon the death of the first spouse and then again upon the death of the survivor. Some of the steps that take place during administration of a trust are; spreading of the will of record, applying for tax identification numbers, settlement meetings, letters to beneficiaries, coordination with CPAs, asset transfers, and instruction letters. The fees associated with administration may be greatly reduced by maintaining an estate plan under a formal updating system.

Trustees Duties

A trustee faces two sets of guidelines when acting under a trust. The first is what is required by law and the second is what is required by the trust document. A trustee is a fiduciary which means that a duty of loyalty to the beneficiary is required. A trustee must apply the standards as they are given in the trust document or risk being personally liable for not conforming to the written instructions. Also, a trustee is generally required to make assets owned by the trust productive. In doing this the trustee must conform with a prudent investor rule requiring assets not be invested in unusually risky investments. A trustee is required to follow certain formalities required by the probate code for the winding up and ultimate distribution of the estate. Trustees may hire attorneys in order to make sure that all duties that are required are carried out.