November 12, 2018
When a loved one has a trust and has passed away, administration of the trust will be necessary. The trust may either need to be distributed or continued for the benefit of its beneficiaries, depending on the trust terms. The person or people designated to serve as the Successor Trustee need to understand what should happen at the time of death of the person who creating the trust. While administering a trust is generally simpler than probating an estate, a trust is not self executing.
There are administrative tasks and expenses that revolve around trust administration that families and Trustees need to understand. The first thing that should happen during trust administration, is that an “administrative” trust should be set up with its own tax identification number. The trust, depending on how the estate planning has been set up, may pay for funeral expenses and possibly last illness expenses of the deceased, as well as ongoing bills and attorney or accountant fees. With the new tax identification number the successor Trustee can set up a new bank account in the name of the “administrative” trust to track all income and expenses. Meticulous record keeping is essential when administering a trust.
There are many other things that can happen in a trust administration.