Trust Administration
Key Points
Trust administration is the process of carrying out the terms of a trust.
Administration may occur during incapacity, after death, or both, depending on the trust.
The successor trustee has important legal responsibilities.
Proper administration often involves attorneys, accountants, financial institutions, and tax professionals.
Good organization and recordkeeping help the process run smoothly.
Introduction
Creating and funding a trust are only part of the estate planning process. Eventually, someone must carry out the trust's instructions. For most revocable living trusts, that responsibility begins when the grantor becomes incapacitated or dies and the successor trustee assumes responsibility.
What Is Trust Administration?
Trust administration is the process of managing trust assets and fulfilling the trustee's legal duties under the trust agreement and applicable law. The specific responsibilities vary depending on the type of trust and the circumstances.
Typical Duties of a Successor Trustee
Typical responsibilities include locating and protecting trust assets, paying valid debts and expenses, communicating with beneficiaries, maintaining accurate financial records, filing required tax returns, working with professional advisors, and distributing assets according to the trust agreement.
How Long Does Trust Administration Last?
Some trusts are administered for only a few months, while others continue for many years or even multiple generations. The duration depends on the trust's terms and the grantor's goals.
Working With Professionals
Many trustees benefit from guidance from attorneys, accountants, financial advisors, appraisers, and other professionals. Seeking qualified advice is often a prudent part of responsible trust administration.
Common Challenges
Family disagreements, incomplete records, difficult-to-value assets, tax issues, and unfamiliar legal requirements can complicate trust administration. Careful planning before incapacity or death can reduce many of these challenges.
Common Misconceptions
Trust administration is always simple.
No. Even relatively modest estates may involve legal requirements, financial decisions, tax filings, communication with beneficiaries, and detailed recordkeeping.
Trustees must do everything themselves.
No. Trustees are often permitted—and frequently encouraged—to work with attorneys, accountants, financial advisors, appraisers, and other professionals when specialized guidance is needed.
A trust eliminates all paperwork after death.
No. Although a properly funded trust may avoid probate for many assets, trust administration still involves significant responsibilities, documentation, and legal obligations.
Frequently Asked Questions
Does every trust require administration?
Most do. Whenever a successor trustee begins serving, some level of trust administration is generally required, even if the process is relatively straightforward.
Can beneficiaries demand information?
Often, yes. Depending on the trust agreement and applicable law, beneficiaries may be entitled to receive certain information about the trust and its administration.
Can a trustee be removed?
Sometimes. Depending on the circumstances, the trust agreement and applicable law may permit a trustee to be removed or replaced.
Is probate always avoided?
Not necessarily. Only assets that have been properly transferred to or otherwise coordinated with the trust may avoid probate. Assets outside the trust may still require probate administration.
Your Next Step
By now, you've learned how trusts are created, funded, managed, and administered. The final question is the one that matters most: Is a trust the right choice for you?
In the final article of the Trust Foundations series, you'll bring everything together by examining when a trust makes sense, when another planning strategy may be more appropriate, and how to decide which approach best fits your family, assets, and long-term goals.
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Article 9 — Trust Administration
About Jarrod Barron Law
Jarrod Barron Law helps Michigan individuals, families, and business owners make informed legal decisions through thoughtful, plain-English estate planning.
Disclaimer
This article is provided for general educational purposes only. It is not legal advice and does not create an attorney-client relationship.