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Trust Administration
At Salmon Bay Law Group, our attorneys work with trustees tasked with administering assets held in trust. Below is some general information about the trust administration process and how we can help.
What is Trust Administration?
Trust administration refers to the care and management of assets held in trust by a trustee. More specifically, trust administration generally involves managing assets, making distributions as provided in the Trust document, and fulfilling other legal and tax obligations. These tasks can involve complex legal duties that require precision and knowledge.
Key Terms Related to Trust Administration
The person who creates a Trust by executing the Trust document is called the “trustor,” “grantor,” or “settlor.” All of these terms have the same meaning.
The “trustee” is the person who is appointed by the trustor to manage the assets held in the Trust. A trustee can be the trustor (under certain circumstances), a family member, a friend, or a professional fiduciary. The trustee must ensure that the terms of the Trust are carried out according to the Trust document and applicable law. As a fiduciary, the trustee has legal and ethical obligations to act in the best interests of the Trust’s beneficiaries.
When someone other than the original trustee steps into the trustee role, they are often referred to as the “successor trustee.” Often the terms “trustee” and “successor trustee” are used interchangeably.
A “beneficiary” is a person who receives some benefit from the Trust, as provided in the Trust document. A “residuary,” “remainder,” or “contingent” beneficiary is a beneficiary who receives assets only after a specific event has occurred, usually the death of a primary beneficiary.
In some situations, the same person can be the trustor, trustee, and beneficiary of a Trust. Other times, the roles are fulfilled by different individuals.
Roles Trustees Can Play In Trust Administration
The tasks required to administer a Trust can vary depending on the type of Trust and phase of administration. At Salmon Bay Law Group, we advise:
- Trustors of Revocable Living Trusts for their own benefit who have questions about serving as their own trustees. These trustees often need to ensure that the Trust has been properly funded, responsibly manage the Trust assets, correctly use the assets for the trustors’ benefit, and comply with other legal and tax requirements.
- Successor trustees of Revocable Living Trusts who are serving while the trustor is still living. These trustees are often responsible for, among other things, the appropriate management of Trust assets, distributing assets to or for the benefit of the trustor according to the terms of the Trust, keeping appropriate records, ensuring tax returns are properly prepared and filed, and preparing annual trust accountings.
- Successor trustees of Revocable Living Trusts who are serving after the trustor dies. These trustees sometimes begin serving during the trustor’s lifetime, but often they are appointed upon the trustor’s death. They generally need to marshal and responsibly manage the trust assets, pay any debts or liabilities, provide legally required notice, ensure all appropriate tax returns are filed, prepare an estate accounting, and ultimately distribute the assets of the trust to the residuary beneficiaries according to the terms of the Trust.
- Trustees and successor trustees of Testamentary Trusts that were set up following the trustor’s death. These trustees are generally responsible for, among other things, the appropriate management of the Trust assets, making distributions to the beneficiaries according to the Trust terms, and complying with all reporting, accounting, and tax requirements.
Unless you are a professional fiduciary or have prior experience serving as a trustee, stepping into this role can raise a lot of questions. It is normal to experience fear and doubt, but you are not alone in this process. Given the breadth of a trustee’s responsibilities, it is often beneficial to build a team of advisors, including a trust administration attorney, a tax advisor and/or accountant, and a financial advisor. Obtaining advice from trusted professionals can ease the burden on the trustee, help avoid costly mistakes, and limit the trustee’s exposure to liability.
How Salmon Bay Law Group Can Help With Trust Administration
At Salmon Bay Law Group, we understand that trust administration can be complex for individuals unfamiliar with the legal process. Our Seatle trust administration attorneys are there for you every step of the way so that you do not miss any deadline or skip any task.
We work to help ensure you have a basic understanding of trust and estate laws so that you have the necessary knowledge to make sound decisions and avoid costly mistakes. Because no two trusts are the same, we will carefully review the language of the Trust you are administering and help you understand the key provisions.
We are here to answer your questions, set expectations, and ease your doubts regarding the management and administration of the Trust. We can advise you regarding protecting the Trust’s assets, necessary record-keeping, payment and reimbursement of costs and taxes, and distributing funds to the beneficiaries, among other things.
While some trust administrations can be wound up fairly quickly, some trustees seek advice periodically over the course of years. We are committed to long-term partnerships with our clients and seek to provide regular and clear communication regarding your responsibilities. We look forward to speaking with you about how we might be able to help.