If you’ve been named as a trustee by a family member or loved one, it can feel overwhelming. If you are not a legal professional or have experience in administering something like a trust, there can also be a steep learning curve. 

To help guide you through the process, we’ll outline some of the key steps and obligations you should consider to help you make sure the trust is managed properly. Keep in mind that every trust is different, and your exact situation might not be covered. But these guidelines can help you stay on the right track.

Trust Administration Basics

As a trustee, your primary responsibility is to administer the trust in accordance with the grantor’s wishes and Indiana law. This means you must manage the trust’s assets and follow the terms of the trust without regard to your own personal interests. Generally the only time you can deviate from the terms of a trust is if they are illegal or unconscionable, or if the terms are otherwise not possible to carry out.

Perhaps the best advice for a trustee is to make sure you keep records of every transaction you undertake as part of administering the trust, and to keep all of your personal property and assets separate from that of the trust.

Trust-Related Terms You Should Know

As with any legal proceeding, understanding the terms associated with a trust is a good first step in executing your duties as trustee. These are foundational terms you should be familiar with:

• Grantor/settlor: The person who creates the trust and transfers assets into it.
• Trustee: The individual or entity responsible for managing the trust according to its terms.
• Beneficiary: The person or entity entitled to benefit from the trust assets.
• Trust agreement: The legal document outlining the terms, conditions, and structure of the trust.
• Revocable trust: A trust that can be modified or revoked by the grantor during their lifetime.
• Irrevocable trust: A trust that cannot be modified or revoked once established, except under specific conditions.
• Fiduciary duty: The trustee’s legal obligation to act in the best interest of the beneficiaries and manage trust assets prudently.
• Corpus (trust property): The assets or property held within the trust.
• Probate: The legal process of administering an estate after death, which trusts can often bypass.

Trust Administration Checklist

Locate and Review Estate Planning Documents

• Gather essential trust documents such as the trust agreement, last will and testament, life insurance policies, powers of attorney, etc. 
• Obtain certified copies of the grantor’s death certificate.
• Ensure all documents are thoroughly understood, potentially with legal assistance.

Understand the Trust Agreement

• Read the trust agreement multiple times to grasp the terms of the trust.
• Consult a trust administration attorney for clarity on legal terms and procedures if needed.

Retain Professional Advisors

• Engage a trust attorney and financial advisor to avoid errors and ensure proper trust administration.
• Ensure proper investment of trust assets as required by the trust.

Transfer and Title Assets

• Transfer the settlor’s assets into the trust as soon as possible after death, if necessary.
• Ensure all trust assets are properly titled under the trust.

Create an Asset Inventory

• Collect and record all trust assets, including non-liquid assets like real estate.
• Hire appraisers for assets with fluctuating values such as stocks.

Open a Trust Bank Account and Manage Trust Finances 

• Open a bank account in the trust’s name for managing expenses, income, and payments.
• Pay the grantor’s debts and any tax obligations, ensuring accurate tax filings.
• Invest trust assets prudently, minimizing risk and maximizing growth.

Communicate with Beneficiaries

• Notify beneficiaries and heirs of the trust administration.
• Provide essential details to beneficiaries such as the terms of the trust, your contact information, and their rights.

Maintain Detailed Records

• Keep thorough records of all trust transactions, income, and expenses.
• Provide annual accounting to beneficiaries and be prepared to justify your actions.

Satisfy Debts and Taxes

• Pay off valid debts before distributing assets to beneficiaries.
• Consult a CPA to handle income and estate tax filings.

Distribute Trust Assets

• Follow the trust’s instructions for distributing assets (either in lump sums or over time).
• Obtain signed receipts from beneficiaries for all distributions.

File Required Tax Returns

• File estate and income tax returns promptly.
• Maintain accurate records for tax purposes.

Protect Trust Assets

• Keep trust assets and your personal assets separate.
• Do not use trust funds for personal gain unless explicitly allowed by the trust.

Ongoing Duties

• Continue to manage any ongoing trust business until the trust is fully administered.
• Ensure final distributions are made accurately and in accordance with the trust’s terms.

Finding the Right Legal Help for Trust Administration

You are not legally required to have an attorney to administer a trust, but navigating the complexities of the trust administration process on your own can often lead to unnecessary stress and potential mistakes.

For over 70 years, BB&C has been a trusted advocate for individuals handling trust and estate matters in Indiana. Our experienced team has extensive knowledge of trust administration and is dedicated to providing top-quality legal representation.

We understand that administering a trust can be overwhelming, especially when dealing with legal and financial obligations. If you need assistance managing a trust or navigating the responsibilities as a trustee, our experienced estate planning attorneys are here to help you manage the process smoothly and efficiently.

Disclaimer: The content of this blog is intended for general informational purposes only. It is advertising material and does not constitute legal advice. Each situation is unique, and you should consult an attorney for personalized advice regarding your specific circumstances.