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Trust Terminology Defined
Before delving deeper into the specifics of trust administration, it may be helpful to define the terms commonly used when talking about trusts.
- Trust: A trust is a legal document that passes assets from a trustor to a trustee and assigns rules for the trustee to hold onto, manage, and distribute property for beneficiaries of the trust.
- Trustor: A trustor is the person who creates the trust – the person whose assets are placed into the trust.
- Trustee: A trustee is the person who holds the trust assets and is responsible for distributing the assets to beneficiaries. The trustee is usually the same person who created the trust.
- Successor Trustee: If the trustee is the same person as the trustor, a successor trustee is named as the person who will take over administration of the trust upon the trustor’s death.
- Beneficiary: A beneficiary is a person who receives the trustor’s property. Multiple beneficiaries can be named on a trust.
What Is Trust Administration?
When creating the trust, the trustor chooses a successor trustee who will take over managing the trust upon the trustor’s death. The successor trustee must understand the instructions of the trust so they know what is required of them during trust administration. They are also expected to protect the trust assets and the interests of the beneficiaries.
The successor trustee is actively involved in trust administration, which begins upon the trustor’s death. The process consists of collecting asset information, paying expenses, and distributing trust property.
What Are the Successor Trustee’s Responsibilities
After the death of the trustor, the successor trustee lets the beneficiaries know they (the successor trustee) will be managing and distributing the trust assets. After doing so, they must take inventory of the assets, which includes collecting bank statements, stock certificates, insurance policies, property titles and deeds, and any other documents pertaining to trust assets. The successor will then contact institutions where the assets are held to obtain and record their current value and determine any outstanding debts.
The next step is for the successor to pay the debts. This step includes filing any estate and income taxes. In some cases, the successor may have to determine if trust assets need to be sold to take care of the expenses.
Once the successor trustee pays the debts and taxes, they distribute trust assets to the beneficiaries according to the trustor’s wishes. The distribution is the final step in the process because the successor has to make sure other financial obligations are taken care of before giving anything to beneficiaries. If an expense or a bill comes through after the assets have been distributed, the successor may be responsible for paying these with their own funds.
We Are Here to Help You with Complex Legal Matters
The successor trustee’s responsibilities can be long and complicated during trust administration. With over 60 years of combined legal experience, our Houston estate planning lawyers are well-versed in the process and can help you navigate the complexities of trust administration. We can provide you with personalized legal guidance to find solutions for your unique circumstances.
Call Stepp & Sullivan, P.C. at (713) 336-7200 or contact us online to discuss matters regarding trust administration.