What Is Trust Administration And How You Can Properly Administer A Trust

If a loved one with a trust passed away, the surviving relatives must go through trust administration. Even though the entire family is most likely to be invested in the proceedings, the person who was named the trustee will be in charge of the process.

Sadly, the trustee is also grieving the death of a loved one and may not have the necessary experience to meet all their judicial responsibilities. This means that an attorney is an integral part of administering the trust and can help the trustee adhere to all the terms of the trust and give the family the necessary piece of mind. 

With that said, we’ll take a closer look at what is trust administration and what it entails in Florida.

What is Trust Administration?

Trust administration is a set of procedures conducted by a living trust trustee in order to execute the terms outlined in the trust after the grantor’s death.

While wills are still popular, many individuals (especially those with larger estates) resort to living trusts as a way to circumvent the time-consuming probate process. The trustee may need to complete different tasks, but it’s ultimately worth it as the maximum amount of assets end up preserved. 

Most importantly, with a trust, you can significantly reduce the chances of a loved one’s wishes being contested, which is quite common with wills and last testaments. 

Legal Duties of a Trustee

Florida laws are very strict on the fiduciary duties of the trustee, including (but not limited to):

1. Administering The Trust

According to Florida Statutes, upon accepting the role of the trustee, the individual must administer the trust in adherence to the terms and best interest of the beneficiaries. Fulfilling this duty is very challenging, particularly when dealing with demanding or otherwise unpleasant beneficiaries. This is why many trustees hire an attorney to help them with the process. 

2. Impartiality

In cases where a living trust has multiple beneficiaries, the trustee is required by Florida law to impartially administer the assets in the best interest of all the beneficiaries. Despite this fact, it’s not uncommon for the trustee to be closer to some of the interested parties and distribute assets unfairly - an act that breaches the terms of the trust and can land the trustee in legal trouble.

3. Prudent Administration

The trustee must be prudent, meaning they’ll be in charge of properly managing or investing assets during the administration while staying within the confines of the trust’s terms and its main purpose.

How to Administer the Trust

Now that you’re aware of what is trust administration and the legal duties of the trustee, we’ll walk you through the main steps in the process. 

1. Reviewing the trust agreement

Preparation is key in all aspects of life, more so when learning what is trust administration and how to administer the trust. You must first locate and review all the estate planning documentation left behind by the deceased loved one. 

Trust documents will outline the way you should distribute the assets. To make matters easier, you should list all beneficiaries and their contact information. 

To avoid making any mistakes, this is the right time to hire an experienced estate planning attorney. A legal professional can help you review all the documentation, offer guidance, and help you with the accounting to ensure that trust administration goes smoothly. 

2. File the Necessary Documents

With the basics out of the way, you can start the trust administration by making the required filings. First, you’ll have to deposit the decedent’s trust documents with the probate court in your county and obtain the death certificates in the county where the decedent’s assets are located.

Death certificates are crucial when accessing transfer proceeds and life insurance policies, as well as removing the deceased individual from the tax rolls. 

Next, file Form SS-4 with the IRS that provides you with a taxpayer identification number for the trust. 

Lastly, you can bring a notice of trust to the court clerk or the probate court, notifying all interested parties that there won’t be a probate, but rather that the trustee will administer the trust. 

A good idea is to hold on to copies of the death certificate, trust agreement (including any amendments), acceptance of trustee forms, and other associated documents. You may need these to prove to third parties like banks and other companies that you have the authority to fulfill duties on behalf of the trust. 

3. Take Inventory of All the Assets

The trustee is responsible for identifying and gaining access to the decedent’s property. In the best-case scenario, the grantor has left a full schedule of their assets, yet, this list may not be available or may be incomplete.

If this is true, you must do the following:

• Locate all financial documentation including bank statements, deeds, etc. 
• Gather support data for ownership of the assets
• Release the assets from any liens by bringing waivers to the County Clerk’s office
• Calculate the amount of money necessary for settling the estate
• Put together a full inventory of the trust and send a copy to each of the beneficiaries
  
  

4. Settle any Debts

Before administering the trust, you must first determine all existing debts including their validity, amount, and associated receipts. 

Keep in mind that some debts are void upon the decedent’s death, so to bypass needlessly minimizing the funds in the trusts, seek a professional opinion before proceeding further. 

This also applies to any due federal taxes that you must settle before you distribute the estate.

5. Distribute the Estate

Once you settle all outstanding estate debts, you’re free to proceed with distributing the assets to rightful beneficiaries. Depending on the provisions of the trust, you may have to hold the assets for the benefit of a particular beneficiary and administer them at a later date.

You are allowed to make partial distributions during the administration, which provides you with the ability to hold funds to pay any liabilities that may occur. Thus, it’s best to only make the final distribution once you pay off all liabilities to stay in compliance with state law. 

Ensure the Administration Goes Smoothly With Expert Guidance From Attorneys at Doane & Doane

Grieving the death of a family member is not easy, and when you add the stress of a trust administration into the mix, even the strongest individuals can crumble under the pressure. 

As you can see, administering the trust may take months, and any technical mistakes can have serious consequences on your and your family’s financial security - a risk that you should never take lightly. 

To avoid any hitches in the process, feel free to reach out to estate planning attorneys at Doane & Doane. We’ve been doing this for two decades and have helped many families through this tough time while also preserving the maximum amount of their estates. 

Thousands of happy clients in the Palm Beach area have chosen us as their estate planning attorney over the last twenty years, and you can do too by calling 561-656-0200 or filling out our contact form.

We’re looking forward to seeing you on your first free consultation!

Note: 

The information in this blog post is for reference only and not legal advice. As such, you should not make legal decisions based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.