Trusts are frequently used in estate planning because of their flexibility and because of the numerous and varied estate planning goals that can be served using a trust. The Trustee of a trust is responsible for administering the trust as well as managing and investing trust assets. Whether you are planning to incorporate a trust into your estate plan or find yourself appointed to be the Trustee of a trust, a basic understanding of trust administration is necessary. A Bellevue trust administration attorney at Legacy Estate Planning, LLC explains what you need to know about trust administration.
Trust Fundamentals
A trust is a relationship that involves property held by one party for the benefit of another. A trust is created by a Settlor, also called a Maker or a Grantor, who transfers property to a Trustee. The Trustee holds that property for the trust beneficiaries. The beneficiary of a trust can be an individual, an entity (such as a charity or political organization), or even the family pet. A trust must have at least one beneficiary but may have an unlimited number of beneficiaries. A trust may have both current and future beneficiaries. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, activates during the Settlor’s lifetime.
Trust Administration and the Role of a Trustee
The overall job of a Trustee is to administer the trust created by the Settlor. A Trustee protects and manages trust assets and administers the trust according to the terms found in the trust agreement. The day-to-day duties and responsibilities of a Trustee, however, can be varied and will likely include the following:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the “Prudent Investor Standard”
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Approving or denying distributions if given discretionary authority
- Keeping detailed trust records
- Preparing and paying trust taxes
Do I Need an Attorney to Administer a Trust?
If you find yourself responsible for administering a trust you may wonder if you need to hire an attorney to help you. While you are not required to hire an attorney to help you administer a trust, if you are the Trustee there are several reasons to do so anyway. As the Trustee of a trust, you are in a fiduciary position, meaning that you must exercise the utmost care when handling the trust assets. A Trustee must be more careful with trust assets than he/she would be with his/her own assets and must always make decisions that are in the best interest of the trust beneficiaries, both current and future (if applicable). To do that, a Trustee must have at least a basic understanding of the applicable state and federal laws relating to trusts and an understanding of the financial concepts necessary to successfully invest and grow the trust assets. The Trustee must also have a clear understanding of the trust purpose and be able to follow the trust terms, whether you agree with those terms or not. Under some circumstances, a Trustee can even be held personally liable for errors made while acting as the Trustee. Particularly if you have never before acted as the Trustee of a trust, it only makes sense to retain the services of an experienced trust administration attorney to help you fulfill your role as Trustee so that you avoid making costly errors.
Contact Bellevue Trust Administration Attorneys
If you have additional questions or concerns regarding trust administration, contact the experienced Bellevue trust administration attorneys at Legacy Estate Planning, LLC by calling (425) 455-6788 to schedule an appointment.
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