A revocable living trust is a very versatile estate planning tool that can be a better choice than a last will. There are a number of reasons why a living trust will be preferable for most people, and we will look at them at another time. In this post, we will explain the anatomy of a living trust and provide a basic outline of the trust administration process.
If you were to establish a revocable living trust, you would be called the grantor or settlor of the device. Some people that do not understand all the facts shy away from trusts because they are under the impression that you surrender control of assets that have been placed into any type of trust. In reality, this is not the case at all.
A trustee is a person or entity that administers a trust. When you establish a living trust, you as the grantor can act as the trustee while you are alive and well. As a result, you have total control of the trust in every way. You can remove property, sign property over to the trust, and adjust the terms at any time. Plus, as the name would indicate, you can revoke or dissolve the trust if you ever choose to do so, and the assets would be in your direct personal possession once again.
The grantor of a revocable living trust can also act as the beneficiary at first. In the trust declaration, you name your heirs as successor beneficiaries, and you also name a successor trustee to administer the trust after you are gone.
Choosing a Successor Trustee
Any adult that is of sound mind that is willing to assume the role can legally act as a successor trustee. In fact, you could actually name a successor beneficiary as the trustee as well. This being stated, if you do not want to go that route for one reason or another, you could ask someone that you know if they would be willing to act as the successor trustee after your passing.
If you do not know anyone that would be suitable, you could consider the utilization of a professional fiduciary. Trust companies offer this service, and the trust department of banks will fill the role. Other entities offer professional trust administration services as well. The fees are rather high, but if your estate is quite valuable, it could be the right choice.
A corporate trustee is not going to have any conflicts of interest, and there will be no favoritism if there are multiple beneficiaries. Financial professionals understand how to manage income producing assets, and this is another benefit. There would be no longevity concerns, and the trustee would know exactly how to proceed after your passing.
Trust Administration Checklist
After the passing of the grantor of the trust, the trustee will have a number of different tasks to complete. All of the necessary legal documents must be gathered, and the validity of the trust must be certified. The administrator will collect money that is owed to the trust, and a trust bank account will be opened.
All of the property that is contained in the trust will be inventoried by the trustee. If necessary, the trustee will consult with legal and accounting professionals. Debts must be paid during the trust administration process, including taxes, and property appraisals may be necessary. In many cases, trust property will be put on the market. It is the responsibility of the trustee to keep accurate records, and they should be shared with the beneficiaries. Ultimately, assets will be distributed to the beneficiaries in accordance with the terms of the trust declaration.
In some instances, the purpose of the trust administration process is to prepare all of the resources to be distributed in lump sums to the beneficiaries. There is no need for a trustee to manage assets over an extended period of time. However, in other instances, the trust will remain intact as an ongoing source of income for the beneficiary or beneficiaries. Under these circumstances, the trustee would have a long-term obligation to administer the trust.
Download Our Free Estate Planning Worksheet!
The Rochester trust administration attorneys at our firm have prepared an estate planning worksheet that you can use to gain a more thorough understanding of the process. It is being offered free of charge at the present time, and you can obtain your copy if you click the following link: Free Estate Planning Worksheet.
Michael Robinson, Estate Planning Attorney
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