Who is involved?
There are often several people involved in creating and administering a family trust, including the person who places assets in trust, the beneficiaries (who receive assets at a specified time), and of course, the trustee, or the person entrusted with the administration duties. Sometimes the trustee is a family member or friend. More often, it is a lawyer, a law firm, an accountant, or some other type of professional familiar with the legal and ethical responsibilities required to administer a trust.
What does this position require?
In terms of asset protection, the person or entity administering family trusts must always try to act in the best interests of the beneficiaries. The complexity and ongoing requirements of such tasks depend largely on the items placed in trust. For example, administering a family home trust is relatively easy because the asset in question brings in no income except when it is sold, and this may not occur until such time as the person who created the trust passes away and the asset is passed on to a beneficiary or beneficiaries - and then only if the trustee is asked to sell the property.
Administering income-producing assets held in trust
For trusts that contain income-earning assets, the ongoing requirements of administration can be more complicated. Even trusts that aren't income earning may still require additional administrative duties if there are stipulations pertaining to passing along items prior to the death of the person who created the trust. The structure may require, for example, annual allocations of funds to children in set increments, or stipulate that certain funds be granted at specific times or for specific reasons (college tuition, say). The trustee will be tasked with managing such administration.
Documenting and making decisions
Further, there are a number of requirements associated with passing on items to beneficiaries. The administrator must inform beneficiaries of their benefits within a certain time frame, assess the value of assets, make sales when necessary, and pay associated taxes, in addition to making disbursements as spelled out in the trust. In some cases, administrators are also responsible for making investment decisions, as well as keeping records and maintaining transparency (so as to avoid any hint of fraud or other unethical actions). The administrator must also act in good faith, making sure not to take unnecessary risks with the assets held in trust.
The long and short of it is that administration can be a difficult and complex task
But this is dependent on the type of trust in question and the requirements associated with managing the types of assets and allocations. It is for this reason that most people interested in setting up trusts elect to hire professionals for the purposes of administration if income producing assets are involved.
So why not learn more and register with TrustUs today.
After all, it's in your hands.