What Does a Trust Administration Mean?

For practical purposes, a trust administrator owns the property in a living or non-living trust. For legal purposes, trust administration includes an additional fiduciary duty, which is the highest obligation in Florida law. This duty includes avoiding conflicts of interest, maintaining confidentiality, and acting with the highest degree of honesty and care. Trustees who don’t meet their fiduciary duties are liable for damages resulting from their actions or inactions.

So, an effective trust administration must feature a trustee (person who manages the trust) who’s a savvy owner and a trustworthy person. For these reasons, the trustee is usually the same persona as the settlor (person who made the trust). However, this arrangement isn’t possible in all cases. In these cases, a St. Petersburg estate planning lawyer has a checklist of sorts. The person or entity chosen to be the trustee must check all these boxes, or trouble is just around the corner.

Identify and Inventory Trust Assets

One of the first steps in trust administration is identifying and taking an inventory of all the assets owned by the trust. These assets might include real estate, bank accounts, retirement accounts, investments, business interests, and personal property.

This job may seem easy, but it isn’t. Many would-be trustees overreach their powers. For example, Tom’s house might be in a trust. But unless ancillary contracts, like private security or landscaping, are specifically listed in the trust documents, the trustee has no power over these agreements.

This common problem underscores the need for a St. Petersburg estate planning lawyer to thoughtfully and carefully draft all trust documents, so as to avoid confusion later.

Manage and Protect Trust Assets

Woody Allen once said that 80 percent of success is showing up. Likewise, 80 percent of managing and protecting trust assets means simply paying the bills and maintaining the property. For example, the trustee must pay the mortgage and keep the grass cut. Additionally, the trustee must also pay financial advisor fees and ensure the investments are making money.

Usually, most people can stop at 80 percent. But since trustees have a higher duty of care, 80 percent usually isn’t good enough. That additional responsibility could mean finding a more favorable mortgage lender or moving money into a higher yield account.

Communicate with Beneficiaries

Clear communication is essential in trust administration. The trustee must continually inform beneficiaries about the status of the trust and provide them with information on how the trust will be administered. Proactive communication helps avoid confusion or potential conflict among beneficiaries. Trustees must also send regular updates or accounting reports, detailing how the assets are being managed and what has been distributed.

Distribute Assets to Beneficiaries

When the time comes, after final debts and taxes are settled, the trustee will distribute the remaining assets to the beneficiaries, as outlined in the trust agreement. The terms of the trust determine the distribution schedule. Some trusts call for lump-sum distributions, while others may call for periodic distributions over time. Trustees must carefully follow the instructions in the trust document to avoid legal issues.

Final Accounting and Termination of the Trust

Once all assets have been distributed, and all tasks completed, the trustee must provide a final accounting to the beneficiaries. This accounting outlines all the financial transactions during the trust’s administration. Barring any disputes, the trustee is finished and loses all legal power.

Connect With a Hard-Working Sarasota County Lawyer

Proper estate administration is just as important as proper estate plan creation. For a confidential consultation with an experienced estate planning lawyer in Sarasota, contact Drude Tomori Law. After-hours visits are available.

Source:

investopedia.com/ask/answers/042915/what-are-some-examples-fiduciary-duty.asp