Administering a Trust
Many people agree to administer a trust without having the slightest idea of what it entails. Most believe it to be a simple matter of distributing the trust assets, but it involves much more. A trustee assumes a fiduciary relationship with the beneficiaries of a trust and, as discussed under the article “A Trustee’s Fiduciary Responsibility,” there is an extensive array of legal duties and obligations imposed on a trustee. As a general rule, administering a trust is a fairly formal process in which the trustee must undertake the distribution the trust assets without the benefit of court guidance. If the trustee ignores the rules of fiduciary responsibility, the trustee may subject the trust to loss and damage, and sometimes may incur personal liability.
In administration, the trustee must take control of the trust assets, including real and personal property, and various financial and investment accounts. Properties must be managed. Management may be directed by the trust, but if the trust is silent, laws in California govern the management of a trust. Notices should be given including a notice to beneficiaries and heirs, and a separate notice to creditors.
During the administration of a trust, the trustee has a duty to keep beneficiaries informed about the administration. The trustee should keep detailed records of all assets in the trust, all income received, and all expenses of the trust. A trustee has an obligation to see that all tax returns required are filed and all taxes are paid. A trustee should consult a professional such as an accountant or an attorney during the administration of the trust.
This is only an outline of the responsibilities of a trustee. Our office has prepared a guide for trustees to use in administering a trust. We work closely with our trustee clients to assist them in administering the trust in a proper and efficient way. We look forward to working with you.