How to administer a trust

While there are many different steps that go into administering a trust, this guide aims to cover the more general steps. Ultimately, a trustee may have to perform additional (or fewer) steps depending on factors such as the size and type of trust, the number of trust beneficiaries, the state where the trust is being administered, and the types of assets held in the trust. The trustee should contact a lawyer for help with these steps and any additional steps involved in administering a trust.

For an overview of how to proceed, follow these steps:

  1. Gather and review important estate planning documents and other relevant documents, including:

    • Last will and testament

    • Certification of Trust

    • Several certified copies of the death certificate

    • Life insurance policies, 401k account statements, and other retirement plan documents

    • Birth certificate and social security number

    • Recent federal and state income tax returns

    • Real estate deeds and vehicle titles

    • Financial records (such as account statements)

  2. Review the Trust Agreement:

    • Trustee powers and limitations in authority are listed within the trust agreement. It is often important to consult with a trust attorney for clear instructions on how to fulfill the trustee duties listed within the trust agreement.

  3. Secure Trust Property

    • You should create an inventory of property, accounts, and other assets in the trust. Additionally, you should keep accurate records of trust income and trust expenditures. Financial records regarding trust income, expenditures, sales, transfers, and other transactions will ultimately be used to prepare a trust accounting form.

  4. Meet with Professionals

    • It is important to meet with an attorney and tax advisor for help managing and administering the trust. If the trust includes stocks, bonds, and other investments, it may be helpful to meet with a financial planner.

  5. Establish a Trust Bank Account

    • A trust bank account is necessary for investing trust funds in stocks, bonds, and other securities. For more information on documentation necessary for opening a trust bank account, click here.

  6. Apply for Benefits

    • It is the trustee’s responsibility to apply for benefits such as insurance proceeds, employment compensation, pension plans, and other types of benefits that are payable to the trust.

  7. Review the Grantor’s Estate Planning Documents

    • It is important to determine which heirs were and were not granted inheritances to prepare for potential claims against the trust. Speak with an attorney to determine the best course of action for dealing with a disappointed heir.

  8. Pay Debts and Expenses

    • You must pay debts and expenses (such as federal, state, and local taxes) related to trust property.

  9. Complete Trust Accounting

    • It is important to provide an accounting record to beneficiaries (this may have been a requirement established in the Trust Agreement).

  10. Distribute Trust Income or Property to Beneficiaries

    • Trust property and income must be distributed to beneficiaries based on the terms of the Trust Agreement. The trustee is responsible for completing title and deed transfers. Distribution of trust income and property should be formally documented in a Trust Distribution Letter.

  11. Close the Trust

    • You must prepare paperwork for closing the trust. Generally, the process of closing a trust includes sending a written notice to beneficiaries and preparing a written document indicating the trust will be closed.

As stated before, the trust administration process is complex, and the trustee may find it beneficial to enlist the services of professionals for help. For more information on particular steps and terms used in the above guide, click here.

settling affairsJennifer Goodfinancial and propertyComment