If a person dies and they have a Trust, then the successor Trustee, named in the Trust, must “administer” the Trust. They read the Trust and follow all of the instructions in the Trust; they must also follow all of the state and federal laws that impact the decedent’s estate. This is called a Trust Administration or a Trust Settlement.
The process for administering a Trust is similar to a Probate in many important ways; however, the biggest difference is that a Trust Administration is a private process whereas a Probate is a court-supervised process.
Duties of A Successor Trustee
A Trustee’s basic duties involve the collection, management and investment of Trust assets, and the accumulation and distribution of income and principal pursuant to the Trust Agreement.
There are notices that have to be given to all beneficiaries under the Trust and to all the heirs of the decedent. The Trustee has to make a complete inventory of all of the assets of the Trust. Normally, the assets have to be re-titled in order to take into account the fact that the Trust is now administered by the successor Trustee. An Estate Tax Return may be required to be filed.
The principal source of the Trustee’s powers and instructions is the Trust Agreement itself, which should be read carefully.
Liability of Trustee
A Trustee acts in a fiduciary capacity in the administration of a Trust, owing certain legal duties to the beneficiaries.
If the Trustee exceeds their powers, they may be held liable for loss or damage to the Trust Estate. It is essential that the successor Trustee obtain legal advice in order to properly administer the Trust and be protected from liability to the beneficiaries.
Assistance in Trust Administration
The Trustee often hires attorneys, accountants, and investment advisors to consult with concerning the administration of the Trust, and may pay such advisors from the assets of the Trust. Our firm can assist you in your fiduciary duties as Trustee, and advise you on administering the Trust according to the Trust Agreement.
Often the trust document will provide for a “reasonable and customary trustee’s fee” as permitted by state law, so that the trustee will be incented to take on the responsibility and be compensated for their work.
If the trustee is a bank or large institution, they will have their own fee schedule, and the amount charged will vary depending upon the extent of the services that they provide. In general, however, a trustee’s annual fee runs from 1 – 2 percent of the value of the assets being administered, depending upon the complexity and amount of work involved. Often, family members and close friends who are named as trustees will agree to forgo some or all of the fees they would ordinarily receive.
Even if the decedent did not have a Living Trust, formal Probate proceedings may not be necessary upon the death of a love one. However, in all cases involving death, the family members should contact an Estate Planning and Trust Administration attorney to make sure that their property rights are protected and that the assets of the decedent are properly transferred to the rightful heirs.
If you have any questions, or if you would like to set up an appointment, please contact Sandra Bonds Hickey, Esq. at (760) 729-2327.
The information in this article is not, nor is it intended to be, legal advice. This article is for informational purposes only and may or may not apply to you. You should consult an attorney for advice regarding your particular circumstances. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.