If you have been named successor trustee of a loved one’s trust, it could initially be scary and overwhelming. There are many duties and responsibilities involved in trust administration, and you might carry the liability of your fiduciary duty.
Trusts are powerful legal and investment tools used in estate planning to secure asset management of the decedent’s estate, provide a child with a financial future, transfer property to the beneficiaries or heirs without needing to go through probate, and ensure the smooth transfer of wealth from one generation to the next.
Understanding administrative trust after death, its involved parties, and what trust management means can be complex. In this comprehensive guide, we’ll discuss the trust and asset protection fundamentals and explore the intricacies of trust administration so that trust management can be simple, smooth, and stress-free.
A trust is a legal arrangement in which someone manages the estate assets for the benefit of another.
It is created when an individual (also known as a grantor, trustor, or settlor) places their assets in the care of a third party (trustee) for the benefit of another person (beneficiaries).
There are various types of trusts:
Each trust is unique, and the particular requirements contained in a trust will determine how it must be administered and managed.
Trust administration involves managing and overseeing the trust assets on behalf of beneficiaries, according to the terms of a trust agreement.
This means respecting Georgia state and estate tax laws and addressing various administrative tasks promptly and accurately. This process guarantees that the trust operates smoothly and all interested parties understand their duties and responsibilities and act accordingly.
Trust administration services involve the day-to-day management of the trust assets and the settlor’s fulfillment as specified in the trust agreement.
Here is a trust administration checklist that includes the critical components of trust administration services:
A trust administration lawyer is a legal counsel focusing exclusively in trust administration who has experience and a thorough understanding of tax implications related to trust management, estate administration and planning laws, and probate procedures.
Typically, a trust attorney can help the trustee with:
In most cases, trust administration occurs after the grantor (the person who created the trust) passes away.
The trustee must notify the beneficiaries about the changes and is responsible for safeguarding the trust assets and serving the beneficiaries’ best interests.
In a trust, three key players are involved: settlors, trustees, and beneficiaries. They have their own roles related to the trust assets, but each is in a specific way.
The trustee’s job is to hold, manage, and administer the trust funds on behalf of the deceased’s estate and in compliance with the trustor’s wishes. The trustee’s fiduciary duty is to act in the beneficiaries’ best interest.
This position might be held by an individual (such as a family member), an estate planning attorney, or a business (such as a bank or a trust organization). As their actions are subject to legal scrutiny, trustees must be organized, diligent, and transparent.
There are several types of trustees:
A beneficiary is a person or entity entitled to receive the trust’s benefits.
When a trustor leaves funds to a beneficiary, he usually wants to take care of that person financially after the trustor’s death.
For example, the settlor can create a trust fund for beneficiaries who are minors or dependents at the time of the settlor’s death and are unable to manage the funds on their own.
Another example is a charity or nonprofit organization if the settlor wants to ensure that the cause he cared about during his life will continue to receive financial support after his death.
The trust’s documents should clearly define the beneficiaries and the instructions for managing and distributing the assets to prevent disputes.
Beneficiaries should also be informed about the trust’s activities and performance, ensuring they understand how and when they will benefit from the trust.
The settlor (or trustor) is the person who creates the trust, decides its terms and parameters, and provides financial support. They are in charge of choosing the beneficiaries and trustees and determining how the trust’s assets will be managed and distributed.
The trustor must work closely with legal and financial advisors to ensure that the trust document is comprehensive and reflects their true intentions.
A trustee could be an individual, such as a family member, friend, or trusted advisor (for example, an accountant or a lawyer) or an institution, such as a bank or a trust company.)
Choosing the right trustee is paramount for the trust’s success. In Georgia, some of the criteria someone needs to meet to be able to become a trustee are:
The powers of trustees depend on local laws and are outlined in the trust agreement. It is strongly recommended to have an experienced probate attorney review the trust to explain what powers the trustee may have in your specific situation.
Some common powers that may be seen are:
A trustee must:
When a trustee fails to perform their legal duties according to the trust agreements or under the law, this could commit a breach of trust. This situation might occur when a trustee steals money from the trust, fails to pay taxes as required by the law, or manages the trust assets to enrich themselves.
Beneficiaries may consider legal action, such as asking the court to:
Ensuring the trustees remain trustworthy and competent is crucial to avoiding such scenarios. Regular audits and reviews of the trustees’ performance can also help mitigate potential issues.
These situations are complicated, and we recommend speaking to an attorney about your specific situation to better understand your options
If the grantor had a pour-over will in addition to their trust, the trustee should deposit that will with the Probate Court.
If any assets are left out of the trust, the trustee will assist in the formal probate proceedings to transfer non-trust assets.
In Georgia, successor trustees must notify beneficiaries and heirs. This also means providing them with a copy of the trust agreement and informing them about their responsibilities and rights as trust beneficiaries.
The trustee must also notify the grantor’s financial institutions, bank, and employer of the grantor’s death. Often, this will require the grantor’s death certificate and information about the trust.
At the beginning of trust administration, the trustee should inventory all the trust’s assets (including investing and bank accounts, real estate, personal property, and any other assets).
As part of the trust administration process, the trustee should inventory all the trust’s assets. This includes identifying and appraising all assets held within the trust, such as investments, personal property, and real estate.
Furthermore, the trustee is responsible for the prudent and proper investment of the trust’s assets, including investment decisions and property maintenance. This ensures the growth and preservation of the trust’s assets for the benefit of the beneficiaries.
Once all trust administration fees, debts, and taxes have been paid, the trust assets can be distributed to the beneficiaries according to the terms of the trust agreement. This may involve selling assets and dividing the proceeds among the beneficiaries, transferring ownership of assets to the beneficiaries, or other methods of distribution outlined in the trust agreement.
If the deceased left any assets not included in a trust, the trustee will assist in the formal probate proceedings to transfer nontrust assets. Any retirement accounts, life insurance policies, or investment accounts owned by the deceased should be reviewed.
If the trust is named beneficiary on such assets, they will be consolidated into the trust. If another nominated beneficiary is named, the assets will be passed directly to that person.
Trustees must file necessary federal and state tax returns and pay taxes owed by the trust. Timely and accurate tax filings help avoid penalties, ensure compliance with tax laws, and protect the trust’s assets.
Maintaining detailed and accurate records of the trust’s asset values, financial transactions, and distributions is essential for transparency, fulfilling tax obligations, and demonstrating fiduciary duty.
Proper documentation also supports effective decision-making and future planning.
Due to the complexity of trust management, we recommend hiring an attorney to help you. He can ensure the trust is administered properly and could take some of the responsibilities away from your shoulders. If you would like to learn more about trust administration in Georgia, don’t hesitate to get in touch with our office for a consultation. We would love to help!
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Disclaimer: The information above is provided for general information only and should not be considered legal advice. Our probate attorneys provide legal advice to our clients after talking about the specific circumstances of the client’s situation. Our law firm cannot give you legal advice unless we understand your situation by talking with you. Please contact our law office to receive specific information about your situation.
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