What is Trust Administration?
A trust can be created under either a trust agreement executed during its creator’s lifetime (which can be either revocable or irrevocable) or by a deceased person’s Last Will and Testament. The trustee of a trust is the party appointed to manage and oversee the trust. The process of managing and overseeing a trust is called the trust administration process. At Morgan & DiSalvo, we help parties who are given the role of trustee with the trust administration process.
A trustee’s responsibilities are similar to those of the executor of a will – to preserve and protect the assets placed in the trust, to prepare and file tax returns and handle other compliance matters, to invest trust assets appropriately, and to ensure that distributions can be made to or for the beneficiaries of the trust in a timely and effective manner. A trustee is subject to a fiduciary duty, which is a very high level of responsibility, and, if the trustee breaches the trustee’s fiduciary duty, the penalties can be severe, even including personal liability to the trust’s beneficiaries in some cases. Trust administration can be a complex process and typically involves the following responsibilities and tasks:
- Obtain the legal documents and records needed to administer the trust and prove the validity of the trust: these may include the Will or Trust Agreement that created the trust, a taxpayper identification number for the trust (also known as an employer identification number or “EIN”), and copies of estate or gift tax returns that may show the allocation of generation-skipping transfer (“GST”) tax exemption to the trust, along with copies of deeds for property transferred to the trust, bank and brokerage statements showing cash and securities transferred to and held by the trust, and other documents showing what assets the trust owns.
- Complete an inventory of assets at the beginning of the trust administration process
- Obtain appraisals or valuations of trust assets
- Collect any debts owed to the trust and pay any debts or expenses of the trust
- If the trust is created by a deceased person’s Will or revocable trust, or if the trust is otherwise included in a deceased person’s estate for estate tax purposes, the trustee may need to work with the deceased person’s Executor to help the Executor file an estate tax return (IRS Form 706 and, possibly, state forms in some states), determine whether any estate tax will be payable, whether any amounts need to be paid from the trust for that tax,
- Provide trust accounting and other trust information to trust beneficiaries; generally on at least an annual basis
- Carry out the division of the trust, where necessary, and the distribution of trust assets to or for the benefit of the trust beneficiaries. This process is complex and there are many factors to consider including: the best way to make any given distribution; the best way to allocate trust assets between different beneficiaries’ shares; the need to determine and notify the beneficiaries of potential tax consequences on distributions; making appropriate investments while property remains in the trust, which usually also means balancing the interests of current and future beneficiaries to at least some extent, and which can also mean hiring an investment advisor; and carrying out the intent of the trust.
- Execute needed documents and transfer title of trust property to beneficiaries or others if and when necessary
- If the trust is intended to end at some point, or if it comes to a natural end, the trustee will need to make sure that the trust is appropriately wound up and closed
Each trust is different and the tasks necessary for trust administration can only be determined based on actual facts of the particular situation.
As mentioned above, a trustee is a fiduciary, and is held to a high standard of care under Georgia law. Trustees are faced with serious responsibilities and duties that can result in personal liability for failure to perform duties in accordance with applicable laws.
A trustee’s job is often performed after the loss of a family member or other loved one, at a time of bereavement and grief that can cause added stress and strain to family relationships, making it challenging to field the responsibilities associated with trust administration. Even under happier circumstances, the fact that a trustee may often end up in a position of having to tell a beneficiary “No” when the beneficiary wants a distribution that is not permitted by the trust or that is simply a bad idea often means that a trustee’s job is stressful, and involves making others unhappy. Having the assistance of an experienced attorney can be highly valuable and beneficial to the trustee, helping ensure that the trust administration is carried out properly, and can make fulfillment of trust administration tasks much more seamless and less arduous.
The attorneys at Morgan & DiSalvo have assisted many trustees through the trust administration process, including first time trustees with no experience. We help appointed trustees navigate every aspect of the trust administration process including obtaining EINs for trusts when needed, collecting and managing trust assets, interpreting trust provisions, communicating with beneficiaries, and, where appropriate, making final distributions and closing out the trusts.
Each step of the way, our attorneys provide guidance for how to proceed in administering the trust, with thorough knowledge of trustee and beneficiary rights and options.
If you’re about to go through the trust administration process, you will need reliable counsel who can offer trust administration experience, empathy during a complicated process, and a deep understanding of Wills, Trusts, and Administration law in Georgia. For many years, Morgan & DiSalvo has offered dependable legal services and a depth of knowledge that allows clients to achieve desirable outcomes. Whether you’re a first-time trustee seeking assistance, or you’re looking to understand and interpret the options for creating a trust, we are here to see that you attain your trust and estate goals. We can even help you remove a trustee who is not properly carrying out his or her duties.
At Morgan & DiSalvo, we are proud to offer legal advice to individuals and families planning for life’s inevitable transitions and successions. Our mission is to ensure that you receive a comprehensive understanding of your legal options so that you can carefully weigh the pros and cons before you take action. Do you have questions regarding trust administration in the state of Georgia? We are eager to help.
Contact Morgan & DiSalvo with your trust administration questions today.