If you are named as a trustee to an estate, you must perform your duties efficiently, reasonably, and under the terms of the trust.
Proper trust administration can save you from costly litigation or penalties. It is also essential to follow the laws that govern trusts, as well as the wishes of the Grantor.
Know the Law
Understanding the law is vital to managing your affairs, whether you are a trustee or beneficiary. It includes understanding your legal responsibilities as a fiduciary and the risks you face in this role.
Choosing the right estate planning attorney to guide you through your new duties is also essential. These attorneys know what to look for in your assets and can help you avoid costly errors during the trust administration process.
One of the first tasks you must do as a trust administrator is to take inventory of the estate’s assets. You can work with a qualified trust administration attorney to ensure this is done correctly and completely and within the time limits allowed by the state.
Another important task you must perform is to pay off all debts and obligations that the estate owes. It can include loans, bills, credit card balances, and more. The sooner you pay off these, the faster you can distribute your deceased loved one’s assets. It can save a lot of money for your beneficiaries, and it’s an excellent way to prevent the need for probate.
Know the Rules
Every trust administrator must understand the rules of trust administration in California associated with their role. For example, they must follow the fiduciary duty guidelines outlined by law and operate under certain principles of fairness and prudence.
In addition, you must be completely transparent about how the trust is being managed and when distributions are made. It means keeping records of all financial information regarding the faith, such as how much money is coming in, where it came from, and when it is being spent.
As a trustee, you must ensure that all assets are safely secured and valued. For instance, you may need to inventory all the property in the trust or complete account paperwork for investment and bank accounts. You should also be aware of any life insurance or retirement accounts the trust is entitled to and make sure these are appropriately titled and insured. If you need clarification on the details of your responsibilities, you must speak with an experienced estate planning attorney before making any decisions.
Know Your Role
Trust administration is an essential component of estate planning. It involves a complex legal and financial rule governing how assets are held, invested, and distributed.
As a trustee, you have a fiduciary duty to act in the best interest of the beneficiaries and the Grantor (the person who established the trust). You must abide by all legal requirements and keep proper records as you follow the steps outlined in the written faith.
Choosing the right person to be your trust administrator can make or break your estate plan. A good choice is a professional who understands your financial goals and has a solid grasp on what makes sense for the long-term success of your wealth.
Alternatively, choose a trusted friend or family member who can commit to the job. Just be sure to thoroughly vet your selected candidate before you name them as a trustee. They will be legally bound to follow your philosophies and administer your trust under your wishes.
Know Your Beneficiaries
Every time you open a financial account — bank accounts, life insurance, or retirement assets such as IRAs and 401(k)s – you’ll be asked to name a beneficiary. Having beneficiaries on these accounts helps avoid the probate process after your death, which can be costly and take years for your heirs to access their funds.
Choosing your beneficiaries can be a personal decision, as you consider who depends on you financially and which organizations you’re passionate about supporting. But it’s also essential to make sure you’re naming the right people.
Once you’ve named your beneficiaries, reviewing them regularly is critical. It can be crucial after a significant life change like divorce, marriage, or birth.
Know Your Assets
As a Trust Administrator, you must know what assets are in the trust. You need to know where they are located and their monetary values so that you can manage them properly and document any income and expenses they generate.
Assets are anything of monetary value that an individual or business owns. They can be physical (like cash) or intangible, like a company’s registered trademark.
Once you know your assets, you can calculate your net worth by adding them up and subtracting any debts you owe. It gives you a snapshot of your financial health and lets you see where you need to make improvements or changes.
A clear understanding of your assets is critical to successfully running your business and achieving your goals. It also empowers you with accurate data to make the best decisions possible.