Trust administration can be a lengthy process. Some people fund trusts to distribute their assets after they die. Other people may create a trust with the intention of providing an intergenerational legacy.
A trustee has numerous obligations for the duration of trust administration. Regardless of whether or not the trust instructions require that they distribute property rapidly to beneficiaries or preserve resources for generations to come, trustees have to ensure that they fulfill their responsibilities.
The three tasks below are common obligations imposed on trustees during trust administration.
1. Regular communication
Trustees generally need to provide timely and accurate information to beneficiaries of the trust. They generally need to update beneficiaries when there are changes to the trust’s holdings. Regular communications and annual accounting are key responsibilities for trustees.
2. Asset management
Trustees have a fiduciary duty to beneficiaries. Acting in their best interests typically requires the careful preservation and management of trust resources. Trustees should take steps to ensure that they preserve the value of trust resources or obtain a fair market value when liquidating trust assets. Proper management of resources is a critical component of a trustee’s duty to beneficiaries.
3. Compliance with instructions
The trustor may have provided numerous unique instructions regarding the management of trust resources and the distributions made to beneficiaries. Trustees should not impose their own wishes or values on the trust. They should diligently ensure that they adhere to the guidelines provided by the creator of the trust, as well as any applicable laws.
Trustees may need assistance ensuring that they uphold their fiduciary duty and minimize controversies related to trust administration. Getting experienced estate planning guidance can help trustees protect themselves from removal efforts and the risk of financial liability.