What is Trust Administration and how can it help you?
When a loved one passes and they have a trust, the process of Trust Administration will need to be undertaken. Many attorneys make trust administration sound straightforward at the time their client signs the trust contract without describing completely what will have to be done upon their death. This is problematic as the client also rarely addresses risk policy with the designated Trustee.
The person or persons who will act as Trustees ought to consider what will happen to the person who creates the trust at the time of death. Over the years, our perception has been that clients often have unrealistic expectations of how their trust will work when there is a loss. Clients often believe the trust doesn’t need any more care and it will happen “automatically,” or they don’t know they’re going to need an attorney’s and CPA’s support in administering the trust. These are common misunderstandings. There are administrative responsibilities and costs related to trust administration that must be acknowledged by families and trustees.
One of the most common misunderstandings arises where a husband and a wife have a joint trust and the trust provisions call for the trust to be broken into sub-trusts (most commonly between a Survivor’s Trust and a Bypass Trust). The most frequent reasons for providing this type of trust are succession tax benefits, surviving spouse’s wealth security and divorce-remarriage insurance for the first half of the estate to die.
What’s important to note is that by creating a trust, the person or couple setting up the trust can escape probate (provided the trust is adequately funded) and as a by-product of the estate plan, inheritance tax benefits will result. The method closely resembles probate. It is almost the same; there are just a few small variations including, not having to wait to go through the process, daily or in front of a court.
The three-step process of acquiring asset ownership, settling the assets and providing accounting and delivery can be completed at whatever rate the trustee may have. If properties are quickly liquidated, a trust can be settled in a matter of a month or two. While probate can rarely be done in less than a year and typically takes between 18 and 24 months.
How Long Does the Initial Trust Administration Take?
It can take anywhere from two to typically about six months.
Can Someone Handle Trust Administration Without Legal Counsel?
Likely not. However, it’s not a complicated process. There are different notices that need to be issued. Also, there are different procedures that need to be followed for selling properties, and they’d know how to do it. It’s not hard but they need help.
A living trust is an alternative that can be very appealing for estate planning. You transfer the funds into the trust as the grantor. During your lifespan, the trust retains the money. Upon your passing, the estate will be allocated to the beneficiaries according to the wishes and on whatever timeline you want.