Trust administration is the process of transferring property or assets from the person who created the trust – the grantor – to the beneficiaries. But to ensure that the trustee carries out the grantor’s wishes, they must properly administer the trust. At Dallo Estate Planning, we can offer legal counsel to trust fiduciaries to ensure proper trust management.
A trustee is a fiduciary, which incurs certain legal obligations. A fiduciary relationship means “a relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship in re Karmey Estate, 658 NW2d 796 (2003). Typically, a fiduciary is obligated to act in someone else’s best interest. So, a trustee is legally obligated to act in the best interests of the trust beneficiaries. If a trustee fails to meet this legal fiduciary obligation, they can be held personally liable for losses to the trust and the beneficiaries. As a result, it’s wise to seek legal counsel from an experienced trust administration attorney.
As a fiduciary, a trustee must make sound financial decisions regarding the assets and investments in a trust. Seeking expert advice can help the trustee ensure that they are investing wisely. A written investment plan can also assure the beneficiaries that trust management is in good hands.
The trustee will also pay taxes on behalf of the trust and work to minimize the amount of tax liability that the trust incurs. Failure to pay taxes or incurring late fees and penalties can result in the trustee’s personal liability.
Trustees are also responsible for making distributions to beneficiaries according to the rules of the trust. In many cases, the trustee can determine exactly how they distribute assets to the beneficiaries, whether in cash or securities. In many cases, the trustee will need expert advice to minimize tax liability.
Because administering a trust can be a complicated job, every fiduciary should consult an experienced trust administration attorney to ensure that they understand the scope and the details of the job. At Dallo Estate Planning, we can offer legal and administrative guidance to trustees.
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