For most individuals, a Trust Administration can occur at the most unpleasant time: the incapacity or death of a family member or dear friend. While our emotions are swirling, we can find ourselves left helpless because we are legally unable to make the necessary legal and financial decisions for the grieving family members or friend.
This conundrum presents a multitude of unfamiliar tasks and complex actions related to the administration of a trust after someone has become incapacitated or has died/become deceased.
To better understand the trust administration process…
… we need to review what a trust is and what roles people will play during the administration.
First, a trust is a legal document that describes a legal relationship where an individual transfers title of property to another person for the benefit of either themselves or someone else.
Trustmaker– this person, often referred to as a grantor, trustor, or settlor is the person that creates the trust and transfers property owned by the Trustmaker to the trustee of the trust.
Trustee– this person has the legal obligation to manage the property that is placed into the trust, following the instructions of the Trustmaker as set out in the trust document, and making distributions to the Trust’s beneficiary(ies) as provided in the trust document.
Beneficiary– this is the person or entity that will receive the benefits of the trust.
The administration of a trust while the Trust Maker is alive, but incompetent, is an “incapacity administration”. The administration of the trust after the Trust Maker has died is called a “post-mortem administration.” Both types of administrations involve a process and procedure with the goal of managing and distributing the Trust assets in the most timely and efficient manner to the intended beneficiary(ies).
Post-mortem trust administration consists of a variety of tasks that a Trustee must complete when managing and administering the trust for the benefit of the trust beneficiaries. These includes specific tasks spelled out in the trust document or tasks required of all trustees under state or federal law. The post-mortem administration of a trust is generally without Probate Court supervision.