Trust administration is a method of transferring assets after the death of a trust creator. This method of transferring assets is utilized when the assets to be transferred are held in a trust. The ability to transfer assets through trust administration is one key reason why many people create trusts. If assets do not transfer in this way, and if other estate planning tools are not used to facilitate the timely transfer of assets, assets may have to transfer through the probate process. There are many benefits of trust administration compared with probate that are worth considering as you make your estate plan.
Frank & Kraft can help you to understand the advantages of trust administration over probate if you are thinking of creating a trust. We can also explain the downsides of transferring assets via a trust. You should reach out to an experienced trust lawyer at our firm for help early on in your estate planning process and can also get assistance from our legal team if you are actually going through the trust administration or probate process. Give us a call today to find out all of the many ways in which we can help you with trusts.
Trust Administration Benefits Compared with Probate
One of the biggest benefits of the trust administration process is that it can go much more quickly than the probate process. As Investopedia explains, the probate process can take around a full year to be completed. Waiting for an inheritance can cause significant hardship, especially if the person who passed away was a breadwinner for a family and surviving dependents are waiting for an inheritance to help them make ends meet.
Another significant benefits of administering a trust compared with going through the probate process, is that there is no need to go to probate court and a judge does not have to become involved in the process of distributing the assets of the deceased. The only time a case will go to probate court when administering a trust is if a problem arises. In most circumstances, the process of administering a trust is completed without any judicial involvement at all. The stress of navigating the probate court system is eliminated and you are able to keep your family’s financial information more private.
There are also some downsides to transferring assets through a trust, though. The biggest downside is that it is possible for assets to transfer through the trust administration process only if a trust is created before the decedent passes away. There are costs and complexities associated with the creation of a trust, so advanced planning is necessary. The trust creator will also need to pay fees and costs associated with the creation and management of a trust during his life.
Another possible downside: many people also don’t understand all of the implications of transferring assets via a trust. For example, it is a common misconception that if you are able to transfer assets through the trust administration process and opt out of the probate process, your estate will not owe estate tax. This is not the case- assets that pass through a trust can still be counted in determining if an estate will be taxed and can still be subject to taxation. If you are not informed of how trust administration works and you believe that you’ll be able to avoid the losses estate tax can cause by creating a trust, this can cause substantial financial damage to your family.
Finally, since the court is not involved in the trust administration process, it is important that the trust administrator understand his obligations and be trustworthy and competent enough to act upon them. Heirs or beneficiaries should carefully monitor the process of trust administration to make certain that the trust administrator is moving the process forward, caring for trust assets appropriately, and fulfilling his obligations. If the trust administrator does not behave in an appropriate manner, then there is another big downside: heirs or beneficiaries will need to take action in court to protect their inheritance.
Contact a Trust Administration Lawyer
A trust administration lawyer at Frank & Kraft will provide the advocacy and advice you need to determine if you should create a trust and to understand the advantages that trust creation can provide to you. We can also represent heirs or beneficiaries, trust administrators, executors of estates, and others involved in the probate process or the trust administration process. To find out more about how our legal team can help you with all of your trust or probate issues, give us a call at (317) 684-1100.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.