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Trust Administration

What is Trust Administration

Trust Administration is the process and duty of the Trustee to carry out the terms of the Trust and ultimately distribute the assets to the beneficiaries in the manner and timing outlined in the Trust.

It is similar to Probate in many ways but has two distinctive differences. First, the Trust Administration process is not supervised by the Probate Court and is entirely handled by the Attorney and the client in private. Second, in Probate, assets are distributed outright to the beneficiaries at the end of the process, where as in Trust Administration, the assets may be held back in further Trust to be paid out in the timing and manner specified in the Trust.

Types of Trust We Administer

  • Revocable A/B Trust – death of a spouse
  • Revocable Trust -death of both spouses
  • Irrevocable Life Insurance Trusts
  • Children’s Trusts
  • Dynasty Trusts (Generation Skipping)
  • Spousal Lifetime Access Trusts
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How Trust Administration is similar to Probate:

i. The Trustee primary function is to protect and safeguard all assets.

ii. The Trustee inventories and appraises all assets to determine “fair market value” on the date of death.

  1. These values are used to establish a new “stepped up cost basis” for capital gain purposes.
  2. And determine whether or not the Federal Estate Tax applies.

iii. The Trustee deals with all known creditors and publishes notice in a newspaper to any potential “unknown creditors”.

iv. The Trustee settles all IRS issues and files final Income Tax Returns.

v. Assets are sold and converted to cash or distributed in kind to the beneficiary as the Trust specifies. .

vi. Beneficiaries are provided with an Annual Accounting of all activities of the Trustee.

vii. Trustee is entitled to reasonable compensation.

viii. The Trustee has the power to invest and reinvest the Trust assets to maximize returns and at the safe time, safeguard the assets for the beneficiaries.

ix. The Trustee is responsible for filing the annual Income Tax Returns.

Did your loved one pass without a Trust? Click here to visit our Probate page.

How is Trust Administration different than Probate:

i. In Probate, assets are distributed outright to the beneficiary when the Probate process ends. Where as in a Trust Administration, the assets are held in Trust for longer periods of time usually until the beneficiary reaches certain age requirements. The timing of the distributions to the beneficiary is dictated by the Trust. For children, typically 1/3 at age 25, 1/3 at age 30 and 1/3 at age 35.

ii. The Trustee may have “discretionary powers” to make distributions for the beneficiaries health, education, support and maintenance. The timing and the amount of the distributions are dictated by the Trust.

iii. Because the assets are held for longer periods of time, the Trustee has the duty to invest the assets in a reasonable and prudent manner.

iv. The biggest advantage of a Trust over a Will:

  1. Avoids Probate
  2. Controls the timing and the amount of the distributions to the beneficiaries.

v. Provides safeguards and management of the assets until the beneficiary reaches certain ages

How much does Trust Administration cost?

All legal fees are based upon the hourly rates of the Attorney and the Paralegal. Fees largely depend on the length of time the assets are held in the Trust, the complexity of the assets being held, and the tax issues involved. As in Probate, fees go up if there are complicated assets, creditor claims, tax issues or family fights. In most cases our fees are “one and done”. In future years, you only come back and use our services if you have questions or need help. We are not paid a percentage of the assets.

Are you entitled to compensation as the Trustee?

Absolutely. The amount of compensation will depend on the time commitments it takes to administer the Trust, the complexity of the assets, your education and experience in such matters, etc. You can be paid monthly, quarterly or annually.

Why Hire a Lawyer?

Any mistakes made by you as the Trustee creates liability for you. The lawyer’s main job is to protect you from making mistakes. And, the lawyer will obtain a Waiver of Liability from each beneficiary before the Trust is closed. A good Trust Lawyer must have knowledge of the Trust Administration Process, Federal and State Income Taxes, how Probate interfaces with a Trust, or an IRA, Life Insurance or other assets that are passing to the beneficiary outside of the Probate Process.

Who Do We Represent?

We represent you as the Trustee, not the individual beneficiaries.

What Assistance Do You Provide in Selling the Home?

Some of our lawyers are also licensed Real Estate agents and we can assist in that process as well. The advantage to you is that not only are you getting an experience Real Estate Agent, you are also getting an experienced Real Estate Lawyer.

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DWL Experience

Matt Dana has handled literally thousands of trust administrations in his 40+ years of experience. Our biggest advantage is the number of lawyers and paralegals we have. Many probate law firms operate as a “one-man show,” which means it takes these firms much longer to assist you and answer your questions. Additionally, their fees tend to be higher because they do not delegate the work to paralegals.

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