Responsibilities of the Trustee
There are different types of trusts used in estate planning, but perhaps the most popular is the living trust, also called a revocable trust. With a living trust, you can make changes as you see fit, or even abandon the trust altogether if you so choose. A trust will generally include all of your assets and name your beneficiaries.
The main advantage of a trust is avoiding probate court proceedings that are mandated if you die with just a will (or without one, called dying intestate). Probate proceedings can be lengthy, and if there are challenges, costly as well. Administering a trust is done outside of probate, and this can help speed the process and lower costs.
As mentioned, you as the grantor or trustor can name yourself as the trustee while you’re still alive, but you also need to name a successor trustee to manage the trust if you become incapacitated or pass away. A successor trustee can be a relative or close personal friend, or you can name an institution to assume the role. Upon your death, the trustee will basically fulfill all the functions of probate without having to do so in probate court.
Administering the Trust
Trust administration is governed by Chapter 5808 of the 2015 Ohio Revised Code, which states that “the trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries.”
Administering a trust can be complicated and take several months, depending on the complexity of the estate. The trustee may be well-advised to seek the professional help of an estate planning attorney in carrying out the administration of the trust.
Steps involved in the administration process generally include, but are not limited to:
- Locating the trust, will, and other legal documents to understand their provisions
- Identifying and inventorying all assets of the trust
- Transferring property under the name of the trust
- Establishing the fair market value for all assets
- Securing the assets until they can be transferred to the beneficiaries
- Maintaining bank records and receipts for all transactions
- Paying the final bills and obligations of the trust, including taxes
- Managing the trust assets on behalf of the beneficiaries, which may entail selling off some assets or making new investments or reinvestments
- Finally, after settling all financial obligations, distributing the remaining assets to the appropriate beneficiaries in accordance with the wishes of the trustor
This is just a basic outline, as there may be sub-trusts and other instruments that have to be taken into consideration as well. There may also be challenges to the trust, which can further complicate the process. Again, it is advisable to work with an experienced attorney for help in administering the trust.