Trust Administration: Reducing Issues & Family Conflict
What does a Trust Administrator Do?
A trust administrator plays a crucial role in managing and operating a trust, ensuring effective administration and compliance with legal and financial obligations. Their responsibilities include:
Administrative Support: Managing paperwork and safeguarding trust documents.
Record-Keeping: Maintaining detailed accounts of transactions for transparency.
Tax Compliance: Ensuring adherence to tax laws and filing returns to avoid penalties.
Reporting: Keeping beneficiaries informed about the trust's performance and actions.
Understanding the Responsibilities of Trustees and Beneficiaries
Trustee Responsibilities: Trustees have a fiduciary duty to act in the best interests of the trust and its beneficiaries. Many trustees, often appointed by grantors, may underestimate the stress of the role, with about 25% reporting negative feelings. Inexperienced trustees might struggle with tax filings and managing funds, leading to perceptions of unfairness. Appointing a professional trustee can alleviate these challenges.
Exploitation Among Beneficiaries: In “pot trusts” with multiple beneficiaries, one beneficiary's distributions can create conflict and resentment among others. An “equalization provision” can ensure fair distribution upon trust conclusion, and legal options may help resolve disputes.
Conflicts in Blended Families: Family dynamics can complicate trust management when beneficiaries include spouses and children from different marriages. Proactive measures, like separate trusts or clear distribution guidelines, can mitigate potential conflicts.
Investment Decisions: Trustees must invest in the best interest of all beneficiaries. Poor investment choices can lead to criticism and potential liability, especially if certain beneficiaries are favored or if investments are deemed overly conservative or risky.
Our office can effectively address any legal questions about trust administration. If you have any questions, please fill out the following form below and a trust administration lawyer from our office will get back to you.
