Question: What are some of the things I should know BEFORE I agree to be the Administrator of someone’s Trust?
Answer: If you are considering taking on the responsibility of administering someone’s trust, there are a few things you should know about your obligations. Trust administration is an important job, and it can be frustrating or even overwhelming. Keeping various family members and beneficiaries happy, tracking down all of the assets, and complying with Michigan law is no easy juggling act!
Can an Attorney Help You Administer a Trust?
While you might not think that you need an attorney to handle some of the tasks of administration, working with a seasoned estate planning professional is useful to properly carry out the provisions of the trust and give you the knowledge of how to do your job the right way. Not every trust needs to be administered with a Michigan attorney, but many do.
Even trustees managing the simplest trusts should at least consult with an experienced attorney before starting estate and trust administration. Some trusts can be very complex to sort through. Even basic and straightforward trusts will lead to questions about what you should do, when and how.
Professional advice can give you a great deal of confidence with the tasks of administering a trust, such as filing tax returns and other pertinent documents, making wise investment decisions, transferring real estate ownership, communicating with beneficiaries, and funding any sub-trusts.
The Importance of Good Organization and Record Keeping
An important aspect of administering trusts comes down to your own organizational ability. You’ll need to keep records for all the beneficiaries of the trust and be able to contact them with updates and any changes.
If you are carrying out a living trust after someone has passed away, you’ll be required to take on even more responsibility for managing several critical tasks like identifying beneficiaries, dealing with creditors, obtaining death certificates, alerting the Social Security Administration of the death, providing an inventory of trust assets, and establishing a record-keeping system to track every dollar that comes in our out of the trust.
The Right Team of Professionals Can Help Make Your Job Easier
The right team of professionals – an attorney, accountant, and financial planner – can help you set up the right system from the start. It’s much easier to spend the time at the outset of administration getting a clear and efficient system running rather than trying to backtrack and piece together information later on down the road.
Additionally, you will need to make sure that you are compliant with the IRS regarding any trust administration. You will need a federal tax identification number so that the gains and losses from the trust are reported appropriately. Your legal and financial professionals can help. You may also have to interact with other professionals, like realtors or appraisers, in order to verify the value of various assets. Taking the time to put a good team around you will be well worth it in the long run.
Don L. Rosenberg, Attorney and Counselor
The Center for Elder Law
Troy, Michigan