Many estate planning attorneys choose to expand into the practice of trust administration to provide additional legal services to their clients and increase profits in their law firms. As an estate planning attorney, you may initially encounter trust administration when a long-time estate planning client passes away and the family turns to you, as the trusted legal advisor, for help. Or potential clients may find you online while searching for a trusts and estates attorney because they need help handling the legal issues surrounding their deceased loved ones’ final affairs.
Whatever the reason, stepping into the practice of trust administration can be daunting, even for an expert estate planner. To help you get situated and build a solid foundation to confidently serve your clients in the area of trust and estate administration we have created, Trust Administration Overview: A Guide, which covers important topics such as:
- the various roles and responsibilities of trust administration,
- the tasks required to properly administer a trust,
- the kinds of trusts you will likely encounter in trust administration,
- what makes up a deceased individual’s gross estate, and
- the various sources of law that govern trust administration.
Trust and Estate Administration Basics
What Is Trust Administration?
Trust administration consists of a variety of tasks that a trustee must complete when managing the trust for the benefit of the beneficiaries. This includes very specific tasks as spelled out in the trust document as well as the tasks required by all trustees under state law. Some trusts are designed with particular goals in mind, such as providing for a special needs individual or minor beneficiaries, or protecting assets from a trustmaker’s creditors. Other trusts are designed primarily as an alternative to a will for testamentary purposes or to manage the trustmaker’s assets in the event of incapacity. A postmortem administration refers to trust administration that takes place after the trustmaker’s death.
After a trustmaker dies, postmortem administration is required to carry out the trustmaker’s wishes. Assets titled to the trust must be managed. Assets not in the trust but in which the trust has an interest must be marshalled and transferred to the trust. Trust administration might require filing a pour-over will with a probate court or filling out beneficiary claim paperwork to begin the process of making assets payable to the trust.
Other critical trust administration tasks might include paying outstanding debts of the trustmaker, last illness or funeral expenses, and taxes. This is particularly true where most or all of the trustmaker’s assets are held in the trust. Additionally, the trustee may need to provide certain information about the trust to the successor beneficiaries and begin the process of distributing the trust assets according to the terms of the trust.
Join us on October 28th for our Trust Administration Intensive. This daylong immersive program will show you how to implement a system-based approach to trust administration.
Who Administers the Trust?
The trustee is responsible for carrying out certain duties during the trust administration process. Trustee duties are often set out in the trust instrument, though many duties are imposed by state law and only with rare exceptions can they be partially or entirely waived by the trustmaker.
The Attorney’s Role in Trust Administration
An attorney can play a critical role in guiding the trustee through the often confusing maze of trust administration laws and procedures; help the trustee analyze the trust documents, assets, liabilities, tax consequences, and beneficial interests; and develop a strategy for administering the trust.
Sources of Law Applicable to Trusts
When it comes to determining what law applies when interpreting the provisions of a trust, first look to the trust instrument and its governing law (or the law of the jurisdiction designated in the terms of the trust). Occasionally, conflict of law analyses may arise, so it is critical to be on the lookout for such conflicts.
The Uniform Trust Code (UTC), a comprehensive codification of the common law on trusts, including the administration of trusts, has been adopted in some form in the majority of states. The most recent states to adopt the UTC are Illinois and Connecticut, both enacting the UTC in 2019. States that have not adopted the UTC but instead have their own trust codes are Alaska, California, Delaware, Georgia, Hawaii, Idaho, Indiana, Iowa, Louisiana, Mississippi, and New York.
Whether it’s someone who found your services online or the family of a recently deceased long-time estate planning client—trust administration is something that every estate planning attorney will encounter sooner or later in their practice. To help you confidently serve your clients in the area of trust and estate administration, we’ve created the guide, Trust Administration: An Overview.