When a loved one passes away and has created a trust, there will need to be a trust administration process. Administering a trust can seem overwhelming, especially if you have never undertaken that process before. If you’ve been named as a trust administrator by a friend or a loved one, you have a long road ahead of you. Even if the trust agreement is explicit and an experienced lawyer sets up the trust, every trust is different. You may encounter challenges to the trust agreement from beneficiaries.
Trust administration is a necessary but often complex part of the estate planning process. If you’ve been appointed as a trusted administrator, contacting an experienced estate planning lawyer will help you protect yourself. At Jones Gregg Creehan & Gerace, our estate planning lawyers have successfully helped many Pittsburgh area clients navigate the trust administration process. Contact us today to discuss how we can help you with trust administration.
The Benefits of Hiring a Trust Administration Lawyer
More people than ever are using trust-based estate plans to avoid the probate process. There are many benefits to using a trust-based estate plan. However, the trust administration process is challenging, and many people don’t understand how difficult it is until they are involved in it. Every trust agreement is unique, and working with an experienced estate planning lawyer can help you understand the terms of the trust agreement and your fiduciary duties. When legal challenges or other complications arise, an estate planning lawyer can represent your interests and offer sound legal advice.
The Trust Administration Process
Trust administration is a necessary process that occurs after the death of one or both of the trust creators, also called settlors. There are multiple things that a trust administrator must do to protect the successor trustee and ensure proper administration of the trust. Working with an estate planning lawyer for the trust administration process provides trust administrators with peace of mind and the knowledge that they are following all of the legal guidelines.
In most cases, the settlor is alive when he or she creates the trust and appoints himself or herself as a trustee. Since this settlor is typically his or her trustee, he or she will appoint a new trustee who will have the duty to administer the trust when he or she passes away. The trust administration process involves settling complex estate matters and engaging in post-mortem income tax planning.
Duties of a Trust Administrator
Trust administrators in Philadelphia must follow the requirements outlined in the trust agreement and fulfill all of the fiduciary duties of a trustee under the law. Trustees have many fiduciary duties during their trust administration process. Most importantly, trustees must prioritize the beneficiaries who will inherit money or property from the trust above all other considerations. In other words, trustees should not put their interests first, but rather the interests of the beneficiaries.
Trustees have a duty to provide beneficiaries with an accounting of the trust assets. When trustees failed to do so, the beneficiaries may allege that the trustee engaged in the inadequate or irregular distribution of the funds. Trustees must administer the funds legally and according to the trust agreement. When beneficiaries have a reason to believe that the trustee has mismanaged the trust or not fulfilled his or her duty, they can file a claim. Trustees must also fulfill all of the following duties and obligations:
- Take control of the assets owned by the trust
- Appraise the value of the trust assets using their fair market values
- File an affidavit about the settlor’s death
- Send a notice that the trustor has passed away to the legal heirs
- Send a notice that the settlor has passed away to the trust beneficiaries
- Manage the trust assets according to the terms in the trust agreement
- Invest the trust’s assets wisely for the beneficiaries’ benefit
- Submit an income tax return on behalf of the decedent
- Open a bank account in the trust’s name
- Notify all banks and financial institutions of the decedent’s death
- File an estate tax return, when applicable
- Develop a strategy for making tax decisions that impact the trust’s assets
- Sell or transfer trust assets to pay debts and other liabilities
- Transfer the trust’s assets to the beneficiaries according to the trust agreement
Disputes can and do arise during the trust administration process. When the trust agreement isn’t properly drafted or isn’t clear, the beneficiaries may bring legal claims against the trust administrator. Even if the trust document is well-crafted, legal issues can still arise, requiring the services of a trust litigation attorney. In some cases, a person may challenge the legality of the trust agreement by claiming that the settlor lacked the legal authority to create the trust.
A beneficiary or potential beneficiary could claim that the settlor was coerced by someone else into creating the trust or that the trust agreement was forged. Additionally, a person could bring a claim that the trustee has breached his or her fiduciary duties. Trustees have a legal responsibility, called a fiduciary duty, to act according to the directions outlined in the trust. When this doesn’t happen, the fiduciary could be considered in breach of the trust, leaving them open to a legal challenge. We recommend speaking with one of our experienced estate planning lawyers if a legal claim arises during the trust administration process.
Contact a Pittsburgh Trust Administration Lawyer
At Jones Gregg Creehan & Gerace, our trust administration lawyers work closely with clients throughout Pittsburgh to assist them in fulfilling their trust administration duties. Trust administration is a complicated process, and it can be difficult for trustees to fulfill all of their fiduciary responsibilities while maintaining their careers and lives. Our clients can rest assured that we will help them navigate the process while protecting themselves. Contact our Pittsburgh law firm today to learn more about how we can help you during the trust administration process.
Jones Gregg Creehan & Gerace assists clients throughout the Pittsburgh area with their trust administration needs by guiding them through every step of the way.