Trust estates consist of trusts to which assets have been transferred. Assets can be transferred into a trust during life or after death. Trusts that are created and become effective during life are known as “living trusts”; and trusts that become effective as a result of death are known as “testamentary trusts”.
Trust estate administration (the administration of the assets in a Trust) is handled according to the terms that are described in the Trust document. The trust document identifies who the trustee and successor trustees are, who is entitled to the current use of the assets in the Trust and under what conditions and who are the future or contingent beneficiaries of the Trust. The trustee is the person responsible for carrying out the terms of the Trust, which is another way to describe trust administration.
Trust estate administration does not require the oversight of a court or the involvement of an attorney, though having an attorney and a CPA who can be called on for advice and help is recommended. Trusts are relatively complex legal documents, so having an attorney to help interpret and apply the terms of the Trust document is helpful, especially if the Trust creates layers of trusts. If the Trust incorporates complex devices for estate tax planning, having an experienced attorney and CPA is critical for complying with the IRS rules and avoiding estate taxes to the extent that the Trust is designed to avoid them.
Trusts often have layers of trusts built within them, as a Trust as the best and most comprehensive way of dealing with the complexities of family realities and of circumstances that cannot be foreseen.
The trustee is a fiduciary, meaning that a trustee owes the highest duty known to the law in relation to the authority that has been given by the trust document. The fiduciary duty requires the trustee to refrain from self-dealing and to handle the administration of the Trust for the benefit of the people named in the Trust according to the instructions contained in the Trust and the law. The fiduciary duty requires a high level of attention and care, the same type of prudent attention and care that one gives to ones own affairs. The trustee must also be careful to protect assets, to invest them prudently and to make some return on the investment. The trustee is accountable to the Trust beneficiaries who are entitled to accountings from the trustee on a yearly basis and as they request them.
The trust administration continues until all of the instructions in the Trust are carried out, and the assets are distributed to the named beneficiaries according to the Trust terms. Some Trusts may instruct the trustee to hold the assets in Trust for a specified amount of time or until certain triggers happen. Some Trusts are perpetual and are intended to carry on indefinitely.
The Drendel & Jansons Law Group help clients with the interpretation and administration of Trust estates and issues dealing with Trusts. If you need help with the administration of a Trust estate or advice in regard to a Trust, please contact us; we would love to help you.