What You Need to Know about Trust Administration

In recent years, trusts have become a commonplace addition to even the simplest estate plan.  Unfortunately, the creator of a trust doesn’t always discuss the appointment of a Trustee with the intended Trustee. If you recently learned that you were appointed as a Trustee, and you have never served as a Trustee, you probably don’t know where to begin in your trust administration duties. An Oklahoma City trust attorney at Parman & Easterday explains what you need to know about trust administration.

Trust Basics

A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also called a Maker or a Grantor, who transfers property to a Trustee. The Trustee holds that property for the trust beneficiaries.

All trusts are broadly divided into two categories – testamentary and living (inter vivos) trusts. Testamentary trusts do not become active during the lifetime of the Settlor. Instead, a testamentary trust is typically activated by a provision in the Settlor’s Last Will and Testament. A living trust, on the other hand, activates during the Settlor’s lifetime. Living trusts can be further sub-divided into revocable and irrevocable living trusts. As the name implies, an irrevocable trust cannot be changed, modified, or terminated by the Settlor once it activates. If the trust is a revocable living trust, however, the Settlor may modify or terminate the trust at any time.

What Are Your Duties and Responsibilities as Trustee?

In general, the Trustee’s job is to oversee the administration of the trust and manage the trust assets. That explanation, however, is an over-simplification of the duties and responsibilities of a Trustee. In practice, a Trustee plays a number of diverse roles during the administration of a trust. Just a few of the duties and responsibilities you will have as a Trustee include:

• Managing and protecting trust assets
• Abiding by the trust terms unless they are impossible, illegal, or unconscionable
• Investing trust funds using the “Prudent Investor Standard”
• Monitoring trust investments
• Communicating with trust beneficiaries
• Resolving conflicts among beneficiaries
• Making discretionary decisions 
• Distributing trust funds to beneficiaries
• Approving or denying distributions if given discretionary authority
• Keeping trust records
• Preparing and paying trust taxes

How Can a Trust Attorney Help?

One of the most common mistakes Settlors make when creating a trust is naming someone as Trustee because they “trust” that person instead of stopping to think about whether the individual has the experience and/or skills necessary to administer the trust. If you find yourself named as a Trustee, and you are unsure about your ability to successfully administer the trust, failing to ask for help when you need it is a huge mistake that could even lead to personal liability for errors you might make as a result. A Parman & Easterday trust attorney can provide you with advice and guidance in your role as Trustee to ensure that you don’t make any costly mistakes. Your abilities and experience, the complexity of the trust agreement, and the size of the trust assets will all help determine how much help you need in your role as Trustee; however, it is definitely in your best interest, and the best interest of the trust beneficiaries, for you to consult with an experienced trust attorney as soon as possible.

Contact a Parman & Easterday Trust Attorney

For additional information, please join us for an upcoming FREE seminar. If you have questions or concerns about trust administration, contact an experienced Oklahoma City trust attorney at Parman & Easterday by calling 405-843-6100 or 913-385-9400 to schedule your appointment today.