A trust is a key component of estate planning because it allows you to pass on your property to your desired beneficiaries, protect assets, and reduce taxes on assets.
The effectiveness of a trust is entrusted in the hands of a trust administrator also called the trustee. The trustee is usually appointed to oversee the distribution of assets within a trust. The trustee is likely to encounter some problems when administering the trust but these issues can be avoided by working with an experienced trust attorney.
This article will explain some of the common issues that trust attorneys address in trust administration. Continue reading to learn more:
Understanding Trust Administration
When you’re chosen as the trustee, you’re responsible for administering the trust in the absence of the person who creates the account. Every trust comes with a list of beneficiaries and a plan according to the wish of the person who created the trust to distribute their assets.
To avoid future problems, the trustee should converse with the creator of the trust account before they die, to discuss how the trust should be managed after the creator of the trust passes.
Problems Trustees Face When Administering a Trust
Below are some common issues in trust administration:
- Allegations of Mismanagement of Trust Funds
Sometimes, trust beneficiaries accuse the trustee of mismanaging trust funds and investing trust funds for their selfish interest. More often than not, this is usually a baseless claim without concrete evidence. The beneficiaries that do this do so because the trust isn’t managed to suit their selfish interest.
- Disputes Regarding Authority
This usually happens when the primary trustee dies and the secondary trustee takes over the trust account. When this happens, a beneficiary may undermine the authority of the new trustee. However, this issue can be resolved by reviewing the trust documents where it’s stated that all authority is transferred to the secondary trustee if the primary trustee dies.
- Demands for Distributions from the Trust
Under normal circumstances, the trust document should specify the conditions for distributing assets to the beneficiaries. But sometimes, the trustee can make decisions regarding asset distributions based on their discretion. When this happens, the beneficiary may disagree with the decision of the trustee and conclude that the trustee is making selfish decisions.
- Failure to Transfer Assets to the Trust
A trustee may not always have the full right to administer certain assets. The creator of the trust must ensure that assets are transferred into a trust. Hence, the trustee cannot fully have the authority to transfer assets that weren’t legally transferred into the account. A trustee must ensure the assets are properly secured in the trust before attempting to transfer them or they could get assistance from a court if the assets were not placed in the trust.
- Deceased or Incapacitated Beneficiaries
A trustee may encounter challenges with the trust if the beneficiary of the trust dies or is incapacitated. If there was no provision for such circumstance by the creator of the trust, the trustee would have to seek direction from the court to avoid further issues.
Conclusion
Trust and estate laws are bound to have issues along the line. This is why it’s important to work with an experienced trust attorney who can help set up your trust.
At Citadel Law Firm, we have professional trust attorneys with experience in helping clients set up living trusts, irrevocable life insurance trusts, testamentary trusts, spendthrift trusts, and asset protection.
With our experience, you can rely on us to resolve any legal challenges you may encounter from setting up your trust.
Contact us today to learn more about our services and get started!