These are administrative duties such as management and distribution of trust property performed by your trustee to ensure a seamless process once a trust is created. Trust administration commences the minute the trust is created. A grantor appoints a trustee and trust administrator to help administer their trust upon their demise. Oftentimes, this position is filled by the same person or company.
It is also recommended to work with experienced attorneys to help you facilitate the process for the trustees and hold their hands, guiding them throughout the process upon your demise. As long as a trust is not contested, the successor trustee has all the powers designated to him or her by that trust.
The duties of a Trustee
It is the duty of the trustee to administer the property under their care. Trustees are put under obligation to perform certain duties and are also prevented from making decisions that are not beneficial to the trust.
It is the duty of the trustee to pay taxes on the property and also ensure that they keep detailed financial records. If for any reason, the beneficiaries deem the actions of a trustee questionable, by a trustee either violating the terms of the trust or violating their duties as a trustee. Their act can be declared non-binding and these beneficiaries can decide to remove them.
Types of Living Trust
There are two types of Living trust
- Revocable Trust
- Irrevocable Trust
What is a revocable trust?
A revocable living trust makes it possible for the trust created to be altered or canceled at any time the grantor deems fit. With a revocable trust, any income earned during the life of the trust is distributed to the grantor. This means that it is only upon the demise of the grantor that the property can be transferred to the beneficiaries.
With a revocable trust, the asset held by the trustee for the beneficiaries acts as the principal of the trust. This principle can change often as a result of a trustee’s expenses or as a result of the asset’s depreciation or appreciation. A typical revocable trust lists one or more beneficiaries and typically avoids probate. This type of trust comes with advantages
Advantages of Revocable Trust
- A revocable living trust provides flexibility. Decisions that were made by a grantor can be changed at any time
- With a revocable Living Trust, a grantor is able to change or adjust the provisions of the trust and earn income
- A revocable living trust also makes it possible for the living grantor to terminate the trust in all its entirety
- If a beneficiary is a minor and cannot hold property in his or her name, the revocable living trust makes it possible for the minor’s asset to be held in the trust rather than having a court appoint a guardian
- If a grantor has doubts about how a beneficiary would handle an asset, a revocable trust provides a provision where a set amount of money is distributed to the beneficiary rather than leaving the beneficiary with the asset
- If a grantor owns properties outside his state, with a revocable trust, ancillary probate is avoided.
Developing a revocable trust, however, requires the skill and expertise of professional attorneys. This type of trust involves a lot of time and effort as assets must be retitled in the name of the trust. The grantor’s estate plan should also be monitored annually and closely to ensure that the trust’s objectives are met. This is to avoid probate.
What is an irrevocable trust?
An Irrevocable trust on the other hand is a direct opposite of a revocable trust. Once an irrevocable trust is signed and sealed by the grantor, the content of the trust cannot be changed, amended, modified, or terminated without the permission of the beneficiaries named by the grantor. Once a grantor signs, this means that he or she has transferred all ownership of assets into the trust. This automatically removes all of their rights of ownership to the assets and to the trust.
Setting up any kind of trust can be a bit overwhelming. You would definitely need the aid of experienced attorneys to enable you to go through this process seamlessly. An irrevocable trust might be rigid in that its content cannot be modified but it allows for flexibility in terms of trust management and distribution of assets.