Trust Administration Planning

A trust is a common structure utilized to realize widely recognized and accepted freedom of disposition.  The law of trusts permits the grantor to set forth a private law that both permits and restricts the use of property for the benefit of two or more people, either simultaneously or in succession. 

While trusts are an effective vehicle for wealth management, there is room for disagreements about “who gets how much and when.”  Whatever benefits a trust may provide, conflicts can offset those gains and inflict a burden on the management of the wealth subject to the trust.  Thus, in order to minimize burdens that may result in litigation, every trust should have an administration plan.

A trustee has four rudimentary tasks: to secure and protect the trust assets; invest the trust assets; make distributions to the beneficiaries; and keep records, file tax returns and meet compliance obligations.  The trustee is subject to the highest levels of fiduciary duties, and often come into focus when a dispute arises between the trustee and one or more beneficiaries.  Accomplishing the trustee’s basic tasks may be more complex. 

When an individual trustee takes on a new trust, it is helpful to exercise to follow the common corporate trustee practice of creating a “head sheet.”  The head sheet contains a summary of the key provisions and elements of the trust, including grantor, current and successor trustees, current and successor beneficiaries, remaindermen, purpose and goals tax status, etc.  As part of the trust administration plan, the head sheet should be reviewed and updated.  The significant elements of any trust administration will change over time. 

See Joseph C. Mahon and Patricia Angus, Planning Trust Administration to Avoid Conflicts, Wealth Management, Nov. 21, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.