If you are a friend or loved one’s trustee for a revocable or irrevocable trust, you are taking on a big responsibility that requires following specific rules and acting in the manner the grantor has asked of you. Trusts are valuable documents for many reasons, and your role is crucial to ensure they accomplish what the grantor intended.

The grantor, or maker of the trust, provides detailed instructions in writing when the trust is formed. Your duties as trustee may accrue during the grantor’s lifetime or after death, but the formal process falls to you in either case. a Lake St. Louis trust administration lawyer could provide the proper guidance for this complex process and answer any questions you may have. Call one of our knowledgeable trusts attorneys to learn more.

Two Predominant Trusts: Revocable vs. Irrevocable

In their lifetimes, grantors create revocable trusts to deposit assets they can remove or change, because they continue to own them. The named beneficiaries can also be changed. The assets remaining at the grantor’s death are distributed to beneficiaries quickly, thus avoiding probate.

Irrevocable trusts cannot be modified because ownership is transferred to the trust. Grantors gain a tax benefit, and assets are distributed by the trustee upon death of the grantor.

Trustees Can Be Held Responsible for Mistakes

Trustees must act solely in the best interests of the grantor because they have a heightened duty, called a fiduciary duty, to do so. Beneficiaries can sue if the trustee dabbles in self-interest. The Missouri Revisor of Statutes § 516.120 requires that an action for breach of a fiduciary duty be brought within five years after discovering it. The law accommodates trustees by allowing them to hire specific professionals, such as attorneys, accountants, and appraisers, to help administer a trust so mistakes are held at a minimum. A Lake St. Louis trust administration attorney could identify and rectify trustee mistakes.

What Are a Trustee’s Duties?

The trustee’s first duty is to abide by the grantor’s wishes. Other actions once the trust is ready to be administered include:

• Pay the trust’s residual bills
• Determine beneficiaries and assets allocated to them
• Retitle assets, such as real property, to sub-trusts or beneficiaries
• Locate trust assets because assets not held in the trust are subject to probate
• Assign a value to assets that will affect income, capital gains, property, and estate taxes
• File a Form SS-4 to obtain a taxpayer identification number (TIN) from the IRS after the grantor’s death
• File a Form 706, a federal estate tax return, if appropriate, although Missouri does not have a state inheritance tax

Spouses ordinarily are not saddled with an estate tax when their spouse dies because of an unlimited deduction, but other beneficiaries file a Form 706 to establish the value of the assets they are inheriting. A trustee may have to file a federal income tax Form 1041, as well as other forms. A trust administration attorney in Lake St. Louis could help with the abundant paperwork.

A Trustee’s Last Duty

Trustees throughout the process of administering a trust should stay in touch with beneficiaries and share progress. Trust assets are distributed much faster than those left to beneficiaries in a will because trusts are excluded from the often-lengthy probate process. An informed beneficiary is not likely to complain and wonder what is going on if a trustee freely informs them.

Reach Out To a Lake St. Louis Trust Administration Attorney For Guidance

Trusts have many uses in estate planning, but you cannot approach devising one or administering one as an afterthought. You can create a revocable trust and manage your assets until you pass away, or an irrevocable trust as a tax advantage or to qualify for help with paying for assisted living care.

When grantors designate a trustee, they are handing someone a complicated job. A Lake St. Louis trust administration lawyer could help you perform that job competently because they are familiar with the legal aspects of this tool. Call one of our seasoned attorneys today to schedule a consultation and learn more about this process.