Understanding Trust Administration: Roles And Responsibilities

In this article, you can discover…

• What trust administration entails.
• The financial records that a trustee must keep.
• How an estate planning attorney can help guide families and trustees.

What Is Trust Administration?

A trust is an agreement to hold assets for another person’s benefit. Trusts operate based on distribution standards, meaning that there are guidelines that stipulate when money can and can not be paid out to the beneficiary. 

The trust administrator is someone appointed by the creator of the trust to manage funds, invest the trust’s money wisely, and ensure the standards of the trust are adhered to. Finally, the trust administrator distributes the trust’s assets in compliance with the trust’s parameters once the trust is terminated. 

What Are The Fiduciary Duties Of A Trustee?

Fiduciary duty means that the trust administrator (or trustee) is legally obligated to put the interests of the beneficiary above their own. When you act as a fiduciary for the trust, you must invest the trust’s assets to bring the highest possible returns, keep accurate records, and understand and carry out the parameters of the trust faithfully. 

It is also important to use the trust’s assets only for the benefit of the beneficiary, not for yourself or for others. You must also be sure never to commingle funds within the trust, as this could be grounds for criminal prosecution. 

What Is The Process For Distributing Trust Assets To Beneficiaries?

The process of distributing trust assets will depend entirely on the parameters of the trust. Be sure to speak with an attorney to make sure you understand what the trust is asking of you and that you fulfill those requirements carefully.

For example, if the trust requires you to distribute land to the beneficiary, you would do this with a trustee’s deed. If the trust requires you to distribute a bank account, you would need to ensure that this distribution is done correctly and that all assets are accounted for to the penny. 

Attorney Farren Sheehan is a seasoned, caring estate law lawyer serving Texas. For over 20 years, she’s helped clients just like you get the support, answers, and insights they need to understand trust administration and care for their children’s futures.

Have questions, or in need of quality legal guidance? Reach out to Sheehan Law, PLLC at (512) 355-0155 for an initial consultation today.

What Records Must A Trustee Keep?

Trustees must keep accurate records of every cent that has gone in and out of the trust and a record of what that amount was used for. All interest income that the trust generates and all payments into the trust must also be recorded and balanced. 

It is advisable to have an attorney or a certified public accountant (CPA) go over the trust’s accounting once a year to make sure that it is up-to-date, balanced, and properly maintained. 

What Are Some Common Challenges Faced By Trustees?

It’s not uncommon for trustees to struggle with the idea of fiduciary responsibility. For example, they may assume that they can use the trust’s assets to buy plane tickets for the entire family to go on vacation together when, in fact, they are permitted only to use trust assets to buy the beneficiary’s ticket. 

It is important to consult with an estate planning lawyer to help you understand the parameters of the trust and your responsibilities, obligations, and restrictions as a trustee. 

Failing to do so can lead you to breach your fiduciary duties. This can cause you to be removed as the trustee or, at worst, find yourself facing a lawsuit or criminal penalties. It is incredibly important to be faithful to your fiduciary responsibilities, and an attorney can help you understand what those are and how to stay compliant with them. 

How Can A Trust Prioritize My Concerns Or Wishes For My Family?

Trusts are one of the most useful estate planning tools available, as they can be tailored to a variety of needs and values. For example, descendants’ trusts allow parents to ensure the children are raised in a manner the parents would want, with the same opportunities and experiences (such as private school or horseback riding) their parents would give them.

Other trusts can be customized to help a child with a substance abuse issue. In such cases, you can tailor a trust to release assets only for that child’s care, ensuring their basic needs are met without being able to squander money on things that will harm them. 

One of the main focuses of my practice is to talk one-on-one with clients about their needs, goals, hopes, and concerns for their loved ones and their assets. These conversations can allow you to articulate your wishes, and can help us draft trusts that are meaningful, helpful, and that ensure that your children have the life you envision for them long term. 

Still Have Questions? Ready To Get Started? For more information on Understanding Trust Administration, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (512) 355-0155 today.