Law Office of Rick Todd Blog

Thursday, May 19, 2016

How to Administer a Trust

Trust administration is a very important role for a person to take on. Being the trustee means holding on to the assets of someone else (usually) and distributing them to others (the trust’s beneficiaries). A trustee is someone who has been entrusted by a grantor to take care of these assets and to give them away under certain conditions that have been spelled out in the trust documents. You can see that the root word for trustee is “trust,” and there certainly is an element of trust in such an important role.

A trustee should be someone who is organized and good with money. The role of trustee is that of a fiduciary, which means that the person chosen has shown acumen in the area of managing money and in ensuring that funds are not wasted.

So what does a trustee do? First and foremost, the trustee needs to follow the instructions in the trust administration documents! Second, because a trustee would be someone that the grantor trusted with money, the trustee needs to understand that the money given to him is not necessarily his. Its assets belong to the beneficiaries, and this means that the assets need to be accounted for and kept somewhere separate. The trustee may be compensated for his role, however.

Trust beneficiaries are to be treated as the trust instructs. If the trust states that a beneficiary that you like gets less allocated to him or her than another beneficiary, then you must still do what the trust says to do. You can’t let your personal relationship with someone get in the way of your duty when it comes to trust administration.

The good news in all of this is that you are not alone in this process. You can draw upon the assistance of others in helping you to manage the trust. Professional trust companies will assist you and accountants and attorneys are available as well. The only catch is that these things cost money. Professional trust companies in Columbia and Howard County will not typically manage a trust worth less than a million dollars. Even so, trustees are often required to keep records and to file tax returns, so someone who specializes in those areas could be of considerable assistance. Finally, someone who can help with investing, usually in a more conservative manner, could help you to oversee the growth of the trust’s portfolio of assets. 

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