Ideally, when a Settlor (the creator) of a trust agreement appoints a Trustee, they discuss the appointment with the intended Trustee first. That doesn’t always happen though. A surprising number of people only find out that they are the Trustee of a trust after the death of the Settlor in the case of a testamentary trust. If you find yourself facing Los Angeles trust administration, and you have never acted as the Trustee of a trust before, you are probably wondering where to start. One of the best thing you can do for yourself and for the trust is to consult with an experienced Los Angeles trust administration attorney. For now, however, it may also help to learn more about trusts and trust administration.
What Is a Trust
A trust is a relationship whereby property is held by one party for the benefit of another. Although once used almost exclusively by the wealthy as a vehicle to protect and pass down the family wealth, trusts have evolved to the point where they are commonly found in the average estate plan. All trusts require the same basic elements, including:
- Settlor – the person who creates the trust and who may also be referred to as the Grantor or Maker of the trust.
- Trustee – an individual or entity that administers the trust terms as well as manages and invests the trust assets.
- Beneficiary – a beneficiary is the person, entity, or even family pet that receives the benefit of the trust assets.
- Terms – created by the Settlor and may be anything that is not illegal or unconscionable.
- Funding – almost anything of value can be used to a fund a trust, including cash, securities, and real property.
Testamentary vs. Living Trusts
Trusts are broadly divided into two categories – testamentary and living (officially “inter vivos”) trusts. As the name implies, a living trust is one that takes effect at the time it is created, during the lifetime of the Settlor. A testamentary trust, on the other hand, is usually activated by a provision in the Settlor’s Last Will and Testament at the time of the Settlor’s death. Testamentary trusts are frequently used by parents with minor children as a way to protect and grow a minor child’s inheritance until the child reached adulthood.
What Does Los Angeles Trust Administration Entail?
If this is your first time serving as the Trustee of a trust, you are probably feeling a bit overwhelmed at the prospect. There are a number of steps you will need to take to fulfill your role as the Trustee properly; however, some of the most important, ad immediate, include:
- Reading the trust agreement – the first thing you need to do is to sit down and read through the trust agreement slowly and thoroughly to ensure that you understand all the terms and provisions of the trust. If you haven’t consulted with an attorney up to this point, now is a good time to do so unless you have the legal background necessary to fully understand the trust terms and conditions.
- Locating and communicating with the beneficiaries – you will need to stay in contact with the trust beneficiaries over the course of your job as Trustee. Now is a good time to locate them and let them know the trust is active and you are the Trustee.
- Inventory trust assets – almost anything of value can be used to fund a trust. Take an inventory of all assets and get a current value for each.
- Set up financial accounts – because a trust is a separate legal entity, you will need to open financial accounts in the name of the trust.
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about conservatorship in the State of California, contact the Collins Law Firm by calling (310) 677-9787 0r Click Here reserve for a Free Estate Planning Workshop.