Trust Administration

Trust administration tends to proceed as the tasks required by law and the provisions of the trust are completed. In general, these tasks and the work of trust administration will be done by the trustee(s), who will be responsible for initiating and overseeing duties like (but not limited to):

1. Notifying trust beneficiaries: Notifications may not be a one-time task, depending on the type of trust involved and who the beneficiaries are.
2. Managing the trusts’ financial affairs: This may involve anything from paying bills and dealing with creditors to working with insurers to receive life insurance proceeds, making investments for the trust, and more.
3. Handing all trust records: Along with keeping specific records, trustees will also have to file certain trust records with the court to prove specific obligations have been fulfilled.
4. Satisfying the trusts’ tax obligations: Filing and paying taxes for the trust can be a key part of trust administration, with distinct tax rules potentially coming into play, depending on the trust and its assets.
5. Managing the trusts’ assets: Inventorying, appraising, and distributing the assets of the trust will also be an integral aspect of trust administration.  

Notably, trust administration is NOT the same as estate administration or probate. When it comes to the differences between trust administration, estate administration, and probate in Texas: 

• The court is minimally involved in trust administration whereas it’s more involved in estate administration and probate.
• The trust administration process can usually advance along faster timelines, with more privacy, than probate in Texas.
• Trust administration, though complex, can be an effective option for transferring assets and distributing property.

The administration of a trust can kick off as soon as a trust takes effect and trustees have been appointed. For official appointment in Texas, trustees typically need to submit certain documents to the court, including (but not limited to) a(n):

• Acceptance of Trustee Appointment 
• Affidavit of Successor Trustee
• Certificate of Trust 

All of this can occur when: 

• Grantors create living trusts: Going into effect during the trust maker’s lifetime, living trusts will be irrevocable upon the death of the grantor. Still, the administration of these trusts, including asset distribution, can occur while the grantor is alive.
• Grantors pass away: Death kicks off trust administration when grantors have set up testamentary trusts as part of their wills or estate plans. 

Often, death is involved in trust administration, but it doesn’t have to be. Special needs trusts, SLATs, GRATs, and many other types of trusts can be set up and administered during grantors’ lifetimes, meeting specific needs while offering distinct advantages.

It depends because no two trusts are exactly alike, and:

• More complex trusts can take longer to administer.
• Certain events, like the death of a beneficiary or trust contests, can create unforeseen bumps in the road that may complicate and extend the trust administration process.
• Trustees’ mistakes and oversights can also prolong the trust administration process.
• An experienced trust attorney can make a difference.

In fact, for any party involved in trust administration, an experienced trust lawyer can offer clarity, confidence, and powerful acumen to demystify the process and protect what matters most along the way. That can help simplify trust administration while delivering better outcomes without wasting precious time, effort, or money. 

Carrying out the terms of a trust may hit a roadblock if the trust langauge or terms are unclear. When this happens: 

• Returning to the Statement of Intent in the trust can be crucial.
• The court may need to get involved to interpret or issue rulings on the issue(s) or question(s) at hand.
• Retaining an attorney can be pivotal to taking the right steps in these pricklier situations.

Although trustees are legally obligated to carry out the terms of a trust, this obligation can end with any illegal provisions. In fact, trustees are typically NOT obligated or required to execute any terms that would or could:

• Defraud creditors
• Unreasonably constrain beneficiaries from marrying certain individuals 

At TAW Law TX, our Austin lawyers have encountered all sorts of intricate, sensitive, and potentially thorny terms and situations associated with trusts and trust administration. That is how we have become so effective at guiding clients through the nuts and bolts of trust administration, providing extraordinary counsel when it’s time to address and make key decisions on various options, strategies, procedures, and more.

Trust administration can become the focus of trust litigation whenever disputes or allegations of wrongdoing arise in the process. This can happen with instances or accusations of:

• Illegal or questionable terms of a trust: With questionable provisions, disputes over what a grantor meant or intended with certain property or stipulations can become points of contention.
  
• The misdeeds of a trustee: Referred to as a breach of fiduciary duty, trustees can face these allegations when beneficiaries or others accuse them of mishandling the assets of a trust, failing to pay taxes, or acting in a way that harm’s the best interests of the trust’s beneficiaries. 

The potential for disputes is another reason why it’s prudent to retain an Austin trust attorney whenever you’re a party to trust administration in Texas.