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A trust administrator, also called a trustee, is responsible for managing assets placed in a trust, an arrangement intended to protect a person's property until he is able to take care of it himself. A trustee’s primary duty is to follow the instructions of the trust instrument. Strict compliance with the trust instrument is necessary. The obligations of the administrator include maintaining accurate records, seeking professional advice when necessary, paying taxes, and making reports to beneficiaries of the trust. Duties also include protecting trust assets, accounting for those assets and making proper distributions to beneficiaries of the trust.
Following the instructions of the trust document or trust instrument is extremely important for a trust administrator. The trustee must carefully read and understand the terms of such a document and act in accordance with the instructions. Failure to perform the obligations with diligence could mean a lawsuit. Beneficiaries of the trust can challenge decisions made by a trustee and take legal action against him.
Most jurisdictions have specific laws that establish the obligations of the trust administrator. These laws generally require certain actions and prohibit other types of actions. For example, laws do not permit a trustee to commingle personal assets with trust assets. Laws may require the administrator to act with reasonable care, skill and caution. This means that a trustee must obtain professional advice when managing specific investments belonging to the trust.
Unless a trust instrument gives a directive that one beneficiary be treated differently, a trust administrator must treat all beneficiaries equally and fairly. Even if trust instructions require special treatment for one beneficiary, laws still require that the administrator protect the interests of all beneficiaries. The trustee must be impartial when making decisions and following the directives of the trust document.
A trust administrator must provide accurate information to the beneficiaries upon request. Beneficiaries are entitled to obtain information about the trust assets. This means that each beneficiary may inspect records concerning the trust. A trustee often provides annual statements to beneficiaries or conducts meetings periodically to keep beneficiaries informed. Maintaining detailed records also protects the trustee from false claims.
Beneficiaries, creditors and taxing authorities may raise legal challenges concerning a trust instrument. This means a trust administrator may initiate legal action or defend against a lawsuit to protect the assets of the trust. This responsibility requires that he select and hire a lawyer to help him perform his duties.
A trust administrator can be one person or a group of people. It may also be an organization such as a trust company, a bank or a law firm. The duties and obligations remain the same, whether it is one person, several people or an organization. The only difference is that, if several people are serving as trustees, each of them must take an active part in making decisions when managing the trust assets. These people are co-trustees with equal authority and responsibilities.
Having a trust administrator is also likely to help families avoid having assets tied up in probate court Talentryto. So in the long run, the cost of using a trust administrator could actually save families money in the long run.
If you have set up a trust account for a loved one, a trust administrator is vital in making sure you are legally and financially protected. He or she will be able to handle trust administration when the time comes. The trust administration fee is worth it for the peace of mind this type of professional provides.
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