What Is Trust Administration and Who Is Involved?

Estate planning can make you feel uncertain. You’re making documents that decide what happens after you pass away, preparing for events you’ll never see. You might find yourself wondering how you’ll know that everything will go the way you plan it.

The two core mechanisms governing what happens to your estate are the law and the people you trust to do the work. When you create a trust, it’s governed by state law, and you also assign someone to manage it.

Working with a lawyer when you create estate documents can help you make sure your wishes are clear and binding. A LegalShield® Premium Membership includes preparation of a Revocable Living Trust for a $250 fee per person, and a provider lawyer can advise you on whom you may want to pick to administer it.

Who can administer a trust?

A trustee administers a trust once it has been triggered. Usually, this means that you have passed away or you have become incapacitated. If it’s a Revocable Trust, then you might have been serving as your own trustee. At this point, a successor trustee may step in. Because a trust works completely differently with a grantor’s incapacity versus a grantor’s death, we will focus on trust administration when a grantor (also known as  a trustor) dies.

There aren’t typically many limits on who can serve as a trustee. They're often of the age of majority in the state, meaning the state considers them legal adults. Trustees should be willing to perform their duties and capable of understanding what they entail. Beyond that, your trustee could be a close friend, family member, or a professional, like an accountant or lawyer. There are also dedicated professional services for trusts.

You may want to consider a professional instead of someone close to you for a few different reasons:

• Professionals such as accountants and lawyers know the ins and outs of fiduciary duties.
• When the trustee has professional distance from you, they may have an easier time following your wishes and acting in the best interest of beneficiaries.
• Professionals bring unique knowledge and skill sets that make them good choices for managing a trust and its assets.

What can happen during trust administration?

Administering a trust requires managing the assets for the benefit of beneficiaries once the grantor dies. What that looks like depends on the rules you created for the trust. It might mean holding the assets until conditions are met or distributing them right away.

The trust administration process can be different depending on state law and whether the trust was revocable or irrevocable.

The following are common actions that the administrator will take if the grantor passes away.

Talking to a lawyer

Before taking any other step, the trustee can talk to a lawyer about administering the trust. Lawyers can offer advice on protecting the assets in the trust, following all relevant laws during administration, and meeting all of a trustee’s obligations.

Notifying beneficiaries and other parties

The trustee informs interested parties that he or she is the trustee and of the next steps. This can include informing beneficiaries of their interest in the trust and any rules or conditions.

They may also inform legal authorities and creditors, if you have them.

Inventorying and appraising trust assets

The trustee will gather all of the property in the trust, inventory it, and appraise it. The trustee may need to involve professionals to obtain accurate appraisals of property and other assets.

Paying off final debts, expenses, and taxes

Depending on the circumstances, there may be legal bills, estate taxes, and debts payable from the trust’s assets. The trustee will ensure that the trust complies with obligations it may have under state law.

Caring for assets and keeping records

If assets will stay in the trust for a long time, for example, a home or invested money, then the trustee maintains them. That might include keeping a home up or working with financial professionals to manage investments.

When anything changes in the trust, it’s important to keep records to ensure it’s being managed in compliance with the trust document and state law.

Distributing assets to beneficiaries

The way trustees distribute assets depends on the trust's rules and state law. These are some of the ways you can set up trusts to distribute assets:

• All at once, directly to the beneficiaries
• Gradually, for a period of time, to pay for ongoing care or provide a regular income
• When a condition is met, such as a beneficiary reaching a certain age or a milestone like college graduation

The trustee is also responsible for distributing assets to subsequent beneficiaries if some of the original ones have passed away. You can choose how this happens by creating rules such as per stirpes or per capita.

The difference between trust administration and probate

Trust administration and estate administration with probate are two different estate processes. Trusts are part of estate planning, and trust administration is carrying out the terms of the trust. Estate administration with probate is acting as the estate’s executor and working within the court system to carry out the terms of the Will.

One of the purposes of a trust is to avoid putting certain assets through probate. Trustees manage them, and they do not go through probate.

When the court might get involved in trust administration

Trusts are designed to function without court intervention, but a court may need to intervene in certain situations:

• A dispute between beneficiaries
• A beneficiary has a dispute with the trust or trustee
• The terms of the trust are unclear
• A trustee fails to manage the trust properly or refuses to abide by its terms
• An asset, such as real property, is not transferred to a trust during the grantor’s lifetime

When legal support can help in choosing trust administrators

When they’re set up correctly, trusts are excellent tools for estate planning. They can help you transfer your assets directly to beneficiaries without probate, and you can set up conditions to hold your assets for a long time.

Living Trusts require continued management during your lifetime. Updates are often made when you acquire new assets, as your children get older, and other life events occur. It’s easier to update your estate plan when you have reliable advice from legal professionals who know your state’s laws.

When you have trust documents prepared with a LegalShield Premium Membership, you’ll be connected with a provider law firm that knows your state’s laws. They can help you state your wishes in a way that’s clear and binding.

Get guidance about trusts with a LegalShield Membership

Choosing who will serve as your trustee after the trust is activated is an important decision. It’s totally fine to select someone close to you, but they should be willing and capable. Your choice must be responsible enough to act as a fiduciary for your beneficiaries.

If you need help setting up a trust or have questions about how to choose a trustee to administer it, you can talk to a provider lawyer. In the LegalShield Premium Personal Plan, trust document preparation and annual updates each have a $250 flat fee per person. A provider law firm will set up the trust document according to your wishes or adjust it based on your changes.

Sign up for a LegalShield Personal Plan, log in to the app, and select your service to start your estate plan.

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