What Is Trust Administration and How Does It Work?
Trust administration is the process of managing and distributing a trust’s assets according to the wishes outlined by the settlor (the person who created the trust). Whether the trust is a living trust or a testamentary trust, trust administration begins after the settlor’s passing and often requires the guidance of an experienced trust administration attorney. If you’ve recently been named a trustee or beneficiary, understanding your responsibilities is crucial to ensuring a smooth and legal administration process.
What Is Trust Administration?
Trust administration involves a series of legal and financial steps taken by the trustee to manage the trust’s property for the benefit of the beneficiaries. Assets in a trust may include real estate, personal property, investment accounts, and more. The trustee is responsible for executing the terms of the trust with transparency, accuracy, and in compliance with state laws.
Initial Steps in Trust Administration
The first step in trust administration is sending a legally required notice to all trust beneficiaries and the settlor’s legal heirs. Beneficiaries have a limited window to contest the trust, and missing this window may forfeit their right to do so.
If the trust includes real estate, the trustee must record an affidavit of death and provide a certified death certificate to transfer title of the property. A change of ownership form should also be filed with the county assessor. In cases where property is transferred from a parent to a child, a property tax exemption form may be required to avoid reassessment.
Managing Trust Assets and Debts
Once real property is addressed, the trustee must identify all other assets held in the trust — such as bank accounts and investments — and transfer their title to the trust using the trust’s federal tax ID number. This ensures all income generated from the trust is reported to the IRS.
The trustee must also settle any debts or obligations left by the settlor. This includes filing income and estate tax returns if necessary. Calculating the total value of the estate will determine whether a federal estate tax return must be filed.
Trust Accounting and Legal Support
Most states require the trustee to maintain a detailed accounting of all trust-related activities. This includes all disbursements, income, and expenses. Trustees are responsible for winding up the settlor’s financial affairs and ensuring accurate reporting.
Meeting with a trust administration attorney early in the process helps trustees understand their fiduciary duties and legal responsibilities.
Ask a Trust Administration Attorney Today
If you’ve been appointed as a trustee or are a beneficiary of a trust, professional legal advice can help you navigate the trust administration process smoothly. Visit Hudack Law Estate Planning Attorney to learn more. We proudly serve California, Utah, and Arizona. Call our toll-free at (877) 314-4309 to schedule your consultation with one of our experienced attorneys.