Administration FAQ

The words “trust administration” define the entire process of collecting trust assets, enacting disbursements, paying off debts, and allocating any remaining property and funds according to the terms of the Trust agreement. Under most circumstances, this entire process can be done without any need to set foot in probate court.

Your job may have gotten easier if you are a Trustee with a Certificate of Trust Existence and Authority. Usually prepared by the Trust’s attorney, this document establishes essential material terms of the Trust, such as the taxpayer identification number, the name and address of the Trustee, and any relevant powers pertaining to the Trustee.

Trustees have many responsibilities. These include preserving Trust assets, receiving payments to the Trust in a dedicated bank account created for the Trust Estate, notifying creditors, keeping beneficiaries informed, paying off any debts, and distributing the remaining assets as set down in the Trust.

The job of the Trustee, in broader terms, is to administer the Trust in good faith and accordance with the law.

Trustees are responsible for seeing the Trust administered in accordance with the agreed-upon terms written in the Trust. Their obligations are numerous and can be time-consuming as well as stressful.

Trust beneficiaries, on the other hand, carry almost no responsibility. They are obligated to maintain contact with the Trustee until the disbursement of the Trust is complete. Trust beneficiaries also have the right to request a copy of the Trust document, receive annual accountancy of the Trust, and be informed if the Trustee is being compensated in any manner related to the Trust. 

Many people pass on with some debt still attached to their name. This means that a Trustee will likely have to contact one or multiple creditors after their loved one’s death.

Up to four months after being notified of the Settlor’s death, creditors may present a claim for payment. If a Trustee receives a creditor’s claim, they must decide whether to pay the claim or disallow it. If a Trustee chooses to disallow a claim, the creditor is notified again and has 63 additional days to file an action plan for payment.

Trust beneficiaries, on the other hand, carry almost no responsibility. They are obligated to maintain contact with the Trustee until the disbursement of the Trust is complete. Trust beneficiaries also have the right to request a copy of the Trust document, receive annual accountancy of the Trust, and be informed if the Trustee is being compensated in any manner related to the Trust. 

The moment the Settlor of a Trust passes, the Trust becomes a taxpayer in its own right. Following this, a Trust must have a taxpayer identification number, also known as an employer identification number. A Trust with gross income may have to file a fiduciary income tax return and pay any due taxes.

The official website for the IRS has an online application that you can fill out to obtain a taxpayer identification number. If you would like to complete a physical copy of the application, you can fill out IRS Form SS-4 and submit it to the IRS via mail or fax. Once the application process is finished, the IRS will issue you a taxpayer identification number.

Trusts are often created to avoid probate court after the Settlor’s passing. However, it is sometimes necessary to get the court involved, especially when settling Trust disputes. In most such scenarios, these cases get sent to probate court.

Many variations of a Trust distribution gone awry could result in the case going to probate court. These can include, but are certainly not limited to:

• A Trust is executed under undue influence, duress, fraud, or another defect. 
• The Trustee needs to properly allocate the Trust, too because they have not been able to successfully contact a beneficiary or for some other reason.
• The Trustee is accused of self-dealing. 
• A dispute arises regarding the division of Trust assets.
  
  

The proper handling of a Trust’s administration can feel like a maze. You need a legal team that will help guide you through every step of the process. Rely on La Grasse, Adbo, and Silveri, PLLC, for all your estate planning needs.