Administration of a trust is a process whereby a trustee dissolves or disburses a trust. A trustee can only dissolve a trust upon a trust grantor’s death, and according to the instructions set forth by a trust document. The individuals who are to benefit from trust assets are called beneficiaries and they receive those assets after the affairs of the trust are settled.
Give written notice of administration to the beneficiary upon the trust grantor’s death. Some states permit a beneficiary to contest a trust within a certain period of time, at which point all the parties involved in the trust must attend a hearing.
Ascertain the location of all trust assets. Asset search firms are available to assist you in your effort to recover hidden trust assets.
Review the instructions set forth in the trust document. Determine which assets are to be distributed to which beneficiaries. Look for provisions regarding the distribution of trust accounts and real estate, which may be held for minor children until they become of age.
Generate revenue for trust assets. For example, change standard banking accounts over into interest-bearing accounts.
Have real estate property appraised. Contract a certified appraiser to obtain the fair market value of all trust property. Keep the appraisal report in your trust portfolio.
Convey trust assets to the beneficiary while minimizing the tax burden. For example, distribute trust assets in accordance with the federal tax-free threshold. Hold trust assets that exceed this threshold until the following year and distribute them then.
Fill out any appropriate tax forms with the trust’s gross assets.
Maintain records for the trust. Keep all receipts, loan contracts, profit and loss statements and salary information for the parties involved in the trust.
Check your trust portfolio for amendments to the original trust document.
- Toews Law Offices; Settling the Revocable Trust in California; 2004
- Law Offices of Stephen C. Gruber: Frequently Asked Questions About California Living Trusts
- Estate Planning Links: What Is a Living Trust?
- Internal Revenue Service. "Instructions for Form 5227: Split-Interest Trust Information Return," Pages 1-2. Accessed July 24, 2020.
- Check your trust portfolio for amendments to the original trust document.
Charlie Gaston has written numerous instructional articles on topics ranging from business to communications and estate planning. Gaston holds a bachelor's degree in international business and a master's degree in communications. She is fluent in Spanish and has extensive travel experience.