Trust Administration is an important consideration in Estate Planning. There are a variety of Trust Administration issues that should be discussed with your Estate Planning Advisor before acting as a Trustee or creating a trust that will become irrevocable upon death; e.g., adverse tax consequences, personal liability of trustee, and administrative costs.

Administration of a Revocable Living Trust. If you act as Trustee of your Revocable Living Trust, the Administration of your assets held in the Living Trust will not change from the way you normally manage your assets. Nothing changes but the names on the titles of your assets.

Administration of an Irrevocable Trust. An Irrevocable Trust is considered to have a separate legal identity with a separate taxpayer identification number. The Trustee has a legal fiduciary duty to manage the trust assets for the benefit of the beneficiary and must perform the responsibilities of Proper Trust Administration with a high standard of care (note: this includes many financial and accounting responsibilities).

Post Death Administration of a Living Trust. A typical Living Trust centered Estate Tax Plan for a married couple provides that the married couple will act as Co-Trustees during their joint lives and the surviving spouse will act as sole trustee. Upon the death of one spouse, many Living Trusts (for married couples) provide for the division of the Living Trust into several Irrevocable sub-trusts (e.g., A/B Credit Bypass Trust, QTIP Trust). As a result of these provisions, complex issues arise that must be resolved by the surviving spouse acting as Trustee (this includes dividing the Living Trust into sub-trusts and maintaining proper financial and accounting of any irrevocable sub-trust). Most importantly, a surviving spouse acting as Trustee can be held liable to the beneficiaries of the trust if the trust is not administered properly. Because of the complexity of this Post Death Trust Administration Process, most nonprofessional trustees seek professional advice to assist with Proper Trust Administration after a spouse dies.

NOTE: Always seek the advice of a Tax Planning Professional when analyzing the Gross Value of your Taxable Estate and possible Federal Gift & Estate Tax Liability.