Trust Administration

Although a Last Will and Testament surprisingly remains the most common method of distributing estate assets after death, the wisest choice for most people is a Trust.  The Trust, if properly created and maintained, protects against conservatorship, guardianship and death probate, saves time and money, provides privacy, and protects your beneficiaries from creditors, ex-spouses, spendthrift tendencies and other issues that can cause waste to the estate for those who create the Trust and for their beneficiaries.

When a Trust is used, the Trustor (creator) of the Trust must appoint someone to be the Trustee.  This is the person or entity that manages all the affairs of your Trust, and is almost always the Trustor who created the trust.  A successor Trustee is named to function in the event that the original Trustee cannot function.  If you find yourself in the position of Trustee, you may feel a bit intimidated at the prospect of the responsibility thrust upon you.  To help you avoid making costly errors, the Mesa Trust administration attorneys at Morris Hall PLLC discuss some of the most common Trust administration mistakes.

What Is Your Job as Trustee?

Many spouses, parents, and adult children, and others end up as Trustee without knowing anything about the job. If you have never before served as a Trustee, a good place to start is to learn some of the basic duties and responsibilities you will have as Trustee, such as:

• Managing and protecting Trust assets
• Abiding by the Trust terms unless they are impossible, illegal, or unconscionable
• Investing Trust funds using the “Prudent Investor Standard”
• Monitoring Trust investments
• Communicating with Trust beneficiaries
• Resolving conflicts among beneficiaries
• Making discretionary decisions
• Distributing Trust funds to beneficiaries
• Approving or denying distributions if given discretionary authority
• Keeping detailed Trust records
• Preparing and paying Trust taxes

Trust Administrations Mistakes to Avoid

Despite the best of intentions, it can be very easy to make costly mistakes during the administration of a Trust, particularly if it is your first time serving as a Trustee. Knowing what to watch out for may help you avoid making one of these mistakes. The following are some common Trust administration mistakes you should avoid making:

• Violating Fiduciary Duties – As the Trustee of the Trust you have a fiduciary duty to the beneficiaries of the Trust. In essence, this means that you must put their best interests first when making decisions related to the Trust assets. Not only is it a violation of your duties as a Trustee to do otherwise, but a violation of your fiduciary duty can even lead to legal action against you.
• Creating a Conflict of Interest – The Trustee is often personally acquainted with the beneficiaries of the Trust. Make sure you do not create a conflict of interest as a result of those relationships. Keep your job as Trustee separate from your personal relationships with the beneficiaries.
• Failing to Keep Adequate Records – A Trustee is required to keep very detailed and thorough records of all Trust business. One common mistake is for a Trustee to not take this requirement seriously because the Trust is rather informal. You never know, however, when a Trust might be involved in litigation which is why it is so important to keep records.
• Not Retaining the Services of an Attorney – Administering a Trust often involves complex legal and financial concepts with which the average person is not familiar. For this reason alone it is always wise to retain the services of an experienced Trust administration attorney if you have been appointed the Trustee. Not only is it best for the beneficiaries of the Trust, but it is also best for you as the Trustee because you could be held personally liable for mistakes you make if you forego the assistance of an attorney.
• Failing to Clarify Compensation – The Trustee of a Trust often puts in a considerable amount of time working on Trust duties. It only makes sense then that the Trustee is entitled to compensation for that time. Sometimes, however, a Trustee is reluctant to bring up the issue of compensation because he/she has a personal relationship with the Trustor and/or the beneficiaries of the Trust. Failing to clarify the issue of compensation in the beginning though is likely to lead to a much bigger problem down the road.

Contact a Mesa Trust Administration Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about administering a Trust, contact the experienced Mesa Trust administration lawyers at Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.

Although once used almost exclusively by wealthy families as a way to pass down the family wealth without incurring taxes, trusts are now frequently included in the average person’s estate plan. Trusts come in a variety of types which is one reason for their popularity. One thing that all trusts have in common, however, is the need to appoint a Trustee. Ideally, the Trustor (creator of the trust) discusses the choice of a Successor Trustee with both an estate planning attorney and the prospective Successor Trustee prior to making the appointment. That doesn’t always happen though. If you were recently informed that you were appointed to be the Successor Trustee of a trust, you are likely feeling a little overwhelmed if you have never before served as a Trustee. Consequently, a  first-time Trustee should speak with an experienced trust administration attorney to understand the fiduciary responsibilities.

Trust Basics

A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also called a Grantor. If the Trustor is alive, has capacity and willing to be the Trustee, he/she can also be the Trustee. However, a Successor Trustee is named within the trust should the Trustor die, lose capacity or be unwilling to serve as Trustee. The Trustee holds the property for the trust beneficiaries. The beneficiary of a trust can be an individual, an entity (such as a charity or political organization), or even the family pet. A trust must have at least one beneficiary but may have an unlimited number of beneficiaries. A trust may have both current and future beneficiaries. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Trustor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Trustor. Conversely, a Living Trust activates during the Trustor’s lifetime.

The Job of a Trustee

The overall job of a Trustee is to protect and manage trust assets and administer the trust according to the terms found in the trust agreement created by the Trustor. The day to day duties and responsibilities of a Trustee, however, can be varied and will likely include, but not be limited to, the following:

• Managing and protecting trust assets
• Abiding by the trust terms unless they are impossible, illegal, or unconscionable
• Investing trust funds using the “Prudent Investor Standard”
• Monitoring trust investments
• Communicating with trust beneficiaries
• Resolving conflicts among beneficiaries
• Making discretionary decisions
• Distributing trust funds to beneficiaries
• Approving or denying distributions if given discretionary authority
• Keeping detailed trust records
• Preparing and paying trust taxes

Why Should a First-Time Trustee Work with an Attorney?

As the Trustee of a trust, you are in a fiduciary position, meaning that you must exercise the utmost care when handling the trust assets. A Trustee must be more careful with trust assets than he/she would be with his/her own assets and must always make decisions that are in the best interest of the trust beneficiaries, both current and future (if applicable). To do that, a Trustee must have at least a basic understanding of the applicable state and federal laws relating to trusts and an understanding of the financial concepts necessary to successfully invest and grow the trust assets. The Trustee must also have a clear understanding of the trust purpose and be able to follow the trust terms, whether you agree with those terms or not. Under some circumstances, a Trustee can even be held personally liable for errors made while acting as the Trustee.  If you have never before acted as the Trustee of a trust, it only makes sense to retain the services of an experienced trust administration attorney to help you fulfill your role as Trustee so that you avoid making costly errors.

Contact an Experienced  Trust Administration Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about fulfilling your role as the Trustee of a trust, contact the experienced trust administration attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

The use of a trust has become more common in the estate plans of the average person as either a secondary estate planning tool or as the primary estate distribution method.  Consequently, there is an increasing likelihood that you will be one of the named beneficiaries of a trust agreement at some point in your life. If that has already happened, and this is the first time you have been a beneficiary, you probably have a number of questions about your status as a beneficiary and about how the trust works as a whole. With this in mind, the living trust attorneys at Morris Hall PLLC answer beneficiary questions.

1. What is a trust? At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, who transfers property to a Trustee. The Trustee holds that property for the trust's beneficiaries. A trust is created using a trust agreement. The trust agreement includes terms, created by the Settlor, that dictate how the trust is to be administered by the Trustee.
2. Who can be the Trustee of a trust? The Settlor appoints the Trustee, and usually a successor Trustee as well, in case something happens to the Trustee. Anyone can be the Trustee; however, given the numerous and varied duties and responsibilities of a Trustee, it is wise for a Settlor to give considerable thought to the position before deciding whom to appoint.
3. What are the duties and responsibilities of a Trustee? The overall job of a Trustee is to protect the trust assets and administer the trust. Some of the common duties and responsibilities that go along with the job of Trustee include:
   • Managing and protecting trust assets
   • Abiding by the trust terms unless they are impossible, illegal, or unconscionable
   • Investing trust funds using the “Prudent Investor Standard”
   • Monitoring trust investments
   • Communicating with trust beneficiaries
   • Resolving conflicts among beneficiaries
   • Making discretionary decisions
   • Distributing trust funds to beneficiaries
   • Approving or denying distributions if given discretionary authority
   • Keeping detailed trust records
   • Preparing returns and paying trust taxes
4. Are there guidelines for how the trust assets are invested? First and foremost, the Trustee must follow any directions left by the Settlor with regard to how the trust assets are to be invested. In addition, the law requires a Trustee to use the “prudent investor standard” when investing trust assets. This requires the Trustee to invest with caution, avoiding risk at all times and always focusing on protecting the principal first and growth second. A Trustee should always be more careful with trust assets than he/she would be with the Trustee’s own assets.
5. Does the Trustee have to follow all the trust terms or does the Trustee have discretion when administering the trust? The Trustee must abide by the terms of the trust agreement unless a term is illegal, unconscionable, or impractical. Even then, the Trustee will need to seek the guidance of a court, in most cases, to be justified in ignoring that term. If, however, one of those terms gives the Trustee discretionary authority over specific decisions and/or over the distribution of trust assets, then the Trustee may make those designated decisions independently.
6. Can I do anything if the Trustee isn’t doing his/her job well? As a beneficiary of the trust, you have certain rights. One of those might be the right to remove the Trustee if the Settlor included that right in the trust provisions. Even if the Settlor did not include a provision giving you that right, you can file a petition to remove the Trustee with the appropriate court.
7. What other rights do I have as a beneficiary? The rights you have will depend, to a large extent, on the type of trust. If the trust is revocable you have very few rights because the Settlor retains the right to change anything about the trust at any time, including removing you as a beneficiary. If the trust is irrevocable, you have more rights but even those will still depend on the exact type of trust as well as state law. At a bare minimum, however, for an irrevocable trust you have a right to be kept informed about trust business and to an accounting regarding trust activity. You also have a right to the disbursements of trust assets as outlined in the trust provisions.

Contact Living Trust Attorneys

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about trusts or beneficiary rights, contact an experienced trust attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

Although a Last Will and Testament remains the most common estate planning tool, trusts have steadily increased in popularity over the last several decades.  It is now very common to find a trust in the average estate plan. There are numerous types of trusts that help achieve a wide variety of estate planning goals. One thing that all trusts have in common, however, is the need to appoint a trustee to administer the trust.

A trustee is responsible for the proper management and administration of the trust assets.  If you find yourself as the trustee of a trust for the first time, then you likely feel a bit overwhelmed. The best way to ensure that you do not make a costly mistake in your role as trustee is to retain the services of an experienced trust administration attorney.  You may also find the following trust administration tips helpful:

• Don’t try to go it alone. The duties and responsibilities of a trustee typically require at least a rudimentary knowledge of both legal and financial concepts. In a worst-case scenario, you could be held personally liable for any mistakes or errors you make as the trustee. If you are unsure of yourself, it is important to seek professional guidance before making important decisions involving trust assets.
• Make sure you have a clear understanding of the trust terms. The trust terms reflect the trustor’s intent and guide the administration of the trust.  Therefore, read the trust agreement until those terms are clear to you. Again, if you have any doubts, consult an experienced trust attorney for guidance.
• Document everything. One of your duties as trustee is to keep excellent records of all trust business. Another is to maintain communication with the beneficiaries of the trust and provide updates on trust business. Thus, the better the record keeping and communication, the less likely a claim of breach of fiduciary duty will arise.
• Be vigilant about avoiding conflicts of interest.  A trustee has a duty of impartiality. It is easy for the appearance of a conflict of interest to arise that could threaten a proper trust administration, especially if the trustee is close to a trust beneficiary. Always be aware of potential conflicts of interest and do everything possible to avoid those from occurring.

The above list is not meant to be an exhaustive list of trustee duties, rather it is intended to provide a general foundation for new trustees.  For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about trust administration, contact the experienced attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

Were you recently informed that a family member or close friend named you as the Trustee of a trust? If so, and this is the first time you have served in the role of Trustee, you may be understandably concerned about fulfilling your duties and responsibilities as Trustee without making a costly mistake. Although there are a seemingly endless number of errors that a Trustee can commit, there are also some common pitfalls you should try to avoid during trust administration. Knowing what those are ahead of time will help you to avoid making those common mistakes.

Trust Basics – The Role of Trustee

At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Tustor, who transfers property to a Trustee. The Trustee holds that property for the trust's beneficiaries. A testamentary trust is one that activates upon the death of the Trustor via a provision in the Trustor's Last Will and Testament in most cases. A living trust activates as soon as all formalities of creation are in place. The overall job of a Trustee is to administer the trust and manage the trust assets. Specifically, however, the duties and responsibilities of a Trustee are numerous and may include:

• Managing and protecting trust assets
• Abiding by the trust terms unless they are impossible, illegal, or unconscionable
• Investing trust funds using the “Prudent Investor Standard”
• Monitoring trust investments
• Communicating with trust beneficiaries
• Resolving conflicts among beneficiaries
• Making discretionary decisions
• Distributing trust funds to beneficiaries
• Approving or denying distributions if given discretionary authority
• Keeping detailed trust records
• Preparing and paying trust taxes

Trust Administration Pitfalls

Administering a trust is often a complex and complicated endeavor that frequently requires both legal and financial knowledge and experience. Some of the most common pitfalls every Trustee should be aware of in an effort to avoid include:

• Misunderstanding a trust term. Read through the entire trust agreement several times until you are sure you understand every provision. If anything is vague or confusing, make a note to ask the trust attorney immediately. Ignorance is not an acceptable excuse if you make a mistake as Trustee and in some cases, you could be held personally responsible for an error.
• Failing to consult a trust administration attorney. As Trustee, you will likely have numerous legal questions and concerns. It is not a role you should take on without a legal professional to provide you with advice and guidance.
• Not understanding and/or using the “prudent investor standard.” When you invest assets owned by a trust, you must do so using the “prudent investor standard” which essentially means you must avoid risk, guard the trust principal, and be more careful with the assets and income than you would be with your own assets and income.
• Forgetting about future beneficiaries. If the trust has both current and future beneficiaries, all decisions you make must consider the best interest of both classes of beneficiaries.
• Failing to honor the trust purpose. It is very difficult to set aside your own opinions; however, as the Trustee, everything you do must further the Trustor's intended purpose and must abide by the trust terms unless a term is illegal or unconscionable.
• Creating a conflict of interest. If the Trustor was a family member or friend, there is a good chance you know at least one beneficiary. This can create a conflict of interest if you allow it. Make sure that any personal relationship you have with, or knowledge of, a beneficiary does not in any way interfere with your duties as Trustee.
• Tax errors. A trust is a separate legal entity. Therefore, a trust must file a trust tax return each year. If any taxes are due, they must also be paid in a timely manner. To ensure the tax returns are prepared correctly and any tax due has been calculated accurately it is best to hire a certified public accountant (C.P.A.) to help you and to help you keep the detailed financial records required as Trustee as well.

Contact a Trust Administration Attorney

For more information. If you have additional questions or concerns about trust administration, contact an experienced Phoenix trust administration attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

If you are in the process of creating an estate plan, or you intend to create your plan in the near future, it is important to be familiar with the various estate planning tools and strategies available to help further your plan goals. A revocable living trust is one of the most commonly used estate planning tools.  To help you decide if a trust would be a beneficial addition to your estate plan, the trust attorneys at Morris Hall PLLC explain the top uses for a trust.

Trust Basics

At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also referred to as a Grantor or Settlor, who transfers property to a Trustee.  The Trustee holds and oversees the management of that property for the trust's beneficiaries.

Top 5 Uses for a Trust

Though once used almost exclusively by wealthy families as an efficient way to protect and pass down the family wealth, trusts are now frequently found in the average person’s estate plan. To help you decide if a trust would be a beneficial addition to your estate plan, here are some of the top uses for a trust.

1. Avoiding probate. Probate is the legal process that is typically required after your death to ensure that all estate assets are identified, valued, and eventually passed down to the intended beneficiaries in accordance with your will or statutory provisions. Probate requires court involvement and can be a frustrating process. Unlike assets passing through a will or through intestate succession, assets held in a trust are considered “non-probate” assets, which means they can be distributed outside of probate.
2. Incapacity planning. When you think of estate planning, you likely focus on planning for your eventual death; however, a comprehensive estate plan also plans for the possibility of your own incapacity. A revocable living trust is frequently the tool of choice for incapacity planning. When you create the trust, you name yourself as the Trustee, and the person you choose to take over control of your assets in the event of your incapacity as the Successor Trustee. As the Trustee, you continue to manage the trust assets just as you did before they became trust assets. If incapacity strikes at any time, your designated successor Trustee becomes the Trustee, thereby shifting control of the trust assets without the need for additional action or court interference.
3. Asset protection.  An irrevocable trust is often used as an asset protection tool to protect assets from creditors, divorce, and even spendthrift beneficiaries. Because the trust is irrevocable, it is difficult for creditors to reach the trust assets. A Medicaid trust is a special type of irrevocable trust that is also commonly used to protect estate assets if you need to qualify for Medicaid benefits to help with the high cost of long-term care at some point.

Contact Arizona Trust Attorneys

We have only touched upon some of the top uses for a trust.   If you have additional questions or concerns about trusts, contact the experienced Arizona trust attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

Proper estate planning typically includes a number of different estate planning tools and strategies. One of the most commonly used estate planning tools is a trust agreement, often referred to as a revocable living trust.  A trust is a private document that allows you to direct how your assets should be managed during your lifetime and after you passing with our court involvement.   One of the most important decisions you will make when creating your trust is who to appoint as the Trustee.  Commonly, people will mistakenly appoint someone close to them to be the Trustee without stopping to consider if the person is really the best person for the job. This is often the result of a failure to understand all of the various duties and responsibilities of a Trustee. To help ensure that you don’t make the same mistake, the attorneys at Morris Hall PLLC can help you understand the role of a Trustee.

Trustee Duties and Responsibilities

A Trustee has a wide variety of duties and responsibilities, many of which requires basic. A few of the most common duties and responsibilities of a Trustee include:

• Manage trust assets -- a Trustee must be familiar with all trust assets and prudently manage them at all times. Managing trust assets can mean anything from reconciling bank statements to ensuring that maintenance and upkeep occur on real property.
• Abide by the trust terms unless they are impossible, illegal, or unconscionable –  a Trustee must read the trust and make sure he/she understands all of its terms. The terms of the trust must be carried out objectively without regard for the Trustee’s personal opinions.
• Communicate with trust beneficiaries – in many cases, current and future beneficiaries have a right to know how the trust is being managed.  It is the Trustee’s duty to keep those beneficiaries informed.
• Distribute trust assets to beneficiaries – A trustee has a duty to distribute trust assets in accordance with the trust terms. 
• Keep detailed trust records –  a Trustee has a duty to account to trust beneficiaries, and should always keep detailed records of all trust business to avoid personal liability and/or problems with the beneficiaries.

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about selecting a Trustee, please contact an experienced estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

Although your Last Will and Testament may serve as the foundation for your estate plan, you will likely incorporate numerous other estate planning documents and tools into your plan as well in order to achieve all of your estate planning goals and objectives. One of the most popular estate planning tools is a trust agreement. Trusts have increased in popularity over the last several decades, due in large part to the flexible nature of a trust which allows a trust to help achieve a wide variety of estate planning goals. For those who are unfamiliar with trusts, the living trust attorneys at Morris Hall PLLC explain some trust basics to get you started.

What Is a Trust?

A trust is a relationship whereby an asset (money, real estate, car…) is held by one party for the benefit of another. A trust is created by a Trustor (also referred to as a Maker or Grantor) transferring assets to a Trustee. The Trustee holds that property for the trust's beneficiaries.

Testamentary vs. Living Trusts

All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Trustor’s Will.  A living trust is a trust that takes effect as soon as all the legalities of creation are in place.

Revocable vs. Irrevocable Trusts

Living trusts are further divided into revocable and irrevocable trusts. As the name implies, a revocable living trust is one that can be modified or revoked by the Trustor at any time and without the need to provide a reason. An irrevocable living trust, once it takes effect, cannot be modified or revoked by the Trustor for any reason. Typically, an irrevocable trust can only be changed or revoked by court order.

Testamentary trusts are all revocable because they do not even go into effect until the death of the Trustor at which point they are triggered by a Will that can always be changed prior to the death of the Trustor.

The Role of Trustee

The Trustee of a trust is appointed by the Trustor. Many people make the mistake of simply appointing a spouse or close friend without taking the time to really understand what a Trustee does to determine if that individual is really right for the job. Just a few of the numerous and varied duties and responsibilities of a Trustee include:

• Managing and investing trust assets using the prudent investor standard
• Administering the trust according to the trust terms created by the Trustor
• Keeping detailed records of trust business
• Communicating with beneficiaries and resolving disputes among them
• Distributing trust assets according to the trust terms
• Preparing and paying trust taxes each year

Trust Terms

One thing that makes a trust such an attractive estate planning tool is the flexibility offered by the trust terms. As the Trustor of the trust, you can include almost any terms you wish, as long as they are not illegal, impossible, or unconscionable. If you wish to include a term that says the trust assets can only be used for educational purposes, you can do that. If you want the funds distributed on a specific day each year you can do that as well. Creative use of trust terms can help to foster all kinds of beliefs and philosophies. If family is important to you, a trust term might require a beneficiary to be married or have children before being entitled to disbursements from the trust fund. Conversely, if you don’t want beneficiaries to start a family too early, you could encourage entrepreneurship or continued education with your trust terms as well. The wide latitude a Trustor has when creating trust terms is one reason trusts are so popular.

Contact Living Trust Attorneys

For more information, please join us for an upcoming Complimentary seminar. If you have additional questions or concerns about living trust, or how one might fit into your estate plan, contact an experienced living trust attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.