A trust agreement is often included in a comprehensive estate plan. When a trust is established, the individual responsible for its creation (the “Settlor”) must designate a Trustee. The primary responsibilities of a Trustee include managing the trust assets and administering the trust using the terms found in the trust agreement. If you recently discovered that you were chosen to be the Trustee of a trust, the idea of taking on this role may seem a little overwhelming. While there is no substitute for the personal advice and guidance of an experienced attorney, the Indianapolis attorneys at Frank & Kraft offer some Indiana trust administration tips for the Trustee.
A trust agreement is the legal document used to create a trust. The Settlor of the trust must appoint a Trustee when the trust agreement is drafted. The Trustee’s job is to oversee the administration of the trust which includes numerous duties and responsibilities. A Trustee is in a fiduciary position, meaning that the utmost care must be taken to protect the trust assets and all decisions must be made with the best interests of the beneficiaries in mind. It also means that a Trustee can face personal liability for mistakes made while administering a trust, providing additional incentive to take the job seriously.
Tips for Trust Administration in Indiana
Ideally, the Settlor of the trust discussed your appointment as Trustee when the trust agreement was drafted so your appointment did not come as a surprise. Even if you knew ahead of time, it can still be a bit daunting to suddenly find yourself tasked with administering a trust. To get you started, consider the following tips:
- Read the trust agreement. Then re-read it and then read it again. Carefully read through the trust agreement several times. Then read it one more time again. You may not understand everything right away which is why you should read through it multiple times. Ultimately, you must understand everything in the trust agreement to successfully fulfill your role as Trustee.
- Connect the trust to other estate planning documents. If the Settlor recently passed away, you need to understand how the trust interacts with other estate planning documents. Ask for copies of all estate planning documents, such as the Last Will and Testament, life insurance policies, powers of attorney, and supporting documents so you have a clear picture of how they all fit together.
- Consult with professionals. Unless you have a financial and/or legal background, it is in your best interest to consult with professionals. Consult with an attorney and go over the trust agreement to ensure that you understand all the terms and your obligations as the Trustee. Also, meet with a financial advisor who can help guide you regarding your role as an investor. Remember, mistakes could result in your personal liability.
- Transfer assets into the trust as soon as possible. If the Settlor recently passed away, assets may need to be transferred into the trust from the Settlor’s estate. Refer to the trust terms for guidance and talk to your attorney about the legal steps needed to accomplish the transfers.
- Inventory the trust assets. Create an inventory so you know what the trust owns, where the assets are located, and what they are worth. You will need to update the inventory every time you disburse or sell assets or when the trust gains assets.
- Open a bank account. Because a trust is a separate legal entity for tax purposes you will need to open a bank account right away to be able to transact trust business.
- Reach out to beneficiaries. Introduce yourself to the trust beneficiaries and let them know that you will be handling the administration of the trust. One of your many ongoing responsibilities as Trustee is to communicate with the beneficiaries and make sure they are kept apprised of important trust business.
- Start a recordkeeping system. Document, document, document…everything you do as the Trustee. Not only does this protect you if someone challenges something you did as Trustee, but it also makes it easier to ensure that you are fully compensated for everything you do while administering the trust.
Do You Need Assistance during the Administration of an Indiana Trust?
For more information, please join us for an upcoming FREE seminar. If you find yourself in the role of Trustee and would like assistance administering an Indiana trust, contact the experienced Indianapolis trust administration attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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