There are a lot of responsibilities when it comes to being a trust administrator. Most likely, if you’ve found yourself in this position, you didn’t know much – if anything – about trust administration beforehand. That can leave you with a lot of questions. The lawyers at Lonich Patton Ehrlich Policastri can shed light on your responsibilities and guide you through the administration process.
To start with, what does a trust administrator do?
Trust administrators have a huge responsibility and little room for mistakes. This can be overwhelming. It’s good to know what kinds of duties you will be responsible for going into the process.
- Valuation Of Assets One of the administrator’s fiduciary duties is to assess the assets in the trust and value them. Valuation allows one to determine the total worth of the trust.
- Deducting Liabilities Once the assets worth has been determined, it is the trust administrator job to deduct all liabilities from the total worth. Liabilities include all costs and expenses of the trust.
- Record Keeping The administrator must keep track of the trust funds, taxes paid, and all correspondence. These records must be completely transparent as beneficiaries can view them at any point, but most commonly every six months or on an annual basis.
- Filing Income Tax Returns The admin is required to file income tax returns yearly for the trust. This is because trust assets are not able to be distributed tax free. However, there can be deductions. Any taxes due are paid directly out of the trust. Go here for some tips on fiduciary tax returns.
- Maintaining And Monitoring Assets It is the duty of the admin to maintain the value of the trust and the assets within it. You need to keep track of spending and costs to try and maintain the worth of the trust over time. This requires you to keep track of and audit any change within the trust. This ties back into record keeping.
- Updating/Informing Beneficiaries Beneficiaries must be informed of the trust and updated on the status of the trust over time. The administrator must share trust expenses among other things with all beneficiaries after the initial notice that the trust exists and they are named a beneficiary.
- Safeguarding Interests This means it is the admin’s job to protect the assets against unauthorized spending or use. What is needed to safeguard an asset varies case to case. An experienced attorney can help you determine what’s right for your situation and how to best protect assets. Contact Lonich Patton Ehrlich Policastri for a free 30 minute consultation on trust administration.
Along with their fiduciary duties, trust administrators are also expected to operate under certain principles.
- Good Faith This means that the administrator must be honest, open and transparent in the way they manage the trust and in the ways they benefit from it. This is incredibly important as the beneficiaries have the right to sue the trust administrator if they fail to act in good faith.
- Prudence/Fairness This requires that the administrator operates under these two principles. Fairness ensures the admin avoids playing favoritism amongst the beneficiaries. Prudence requires that the admin does not make risky investments with the trust which also has a hand in safeguarding the assets.
If you’ve been named a trust administrator, it’s normal to feel overwhelmed. There is so much information and it is a huge responsibility. Reaching out to an experienced estate planning lawyer can set you on the right path and prepare you for the duties ahead. Contact Lonich Patton Ehrlich Policastri for a free consultation.