If a friend or family member is getting their California estate plan in order, they may ask you to be in charge of administering their trust. This individual is otherwise known as a trustor or person who establishes a trust. Preparing for this important role means understanding what it entails.
Reading the trust document
The first step in trust administration is closely going over the trust document itself. It should detail the trustor’s wishes and the additional responsibilities of a trust administrator.
Managing the assets in a trust
Assets, including cash, art, stocks, collectibles and other valuable items can all go into a trust. If you’re in charge of administering a trust, you need to know what’s in it and the value of these items. Knowing a trust’s content enables you to manage it appropriately.
Taking accurate records
It helps to be good with numbers and recordkeeping if you have been named as the trustee. As you distribute a trust’s assets to beneficiaries and settle trust-related debts, you’ll need to take records of these transactions. Proper recordkeeping spares a lot of confusion for you and the beneficiaries.
Trusts also require the settling of tax-related debts. You’ll need to thoroughly read, complete and file Form 1041, which is the appropriate form for estate and trust-related federal tax returns. At this point, you’d also need to pay any outstanding taxes on behalf of the trust and the trustor if this person passed away.
Being a trustee can require a lot of work. If you’re considering taking on this role, knowing its responsibilities can better help you prepare for it.