When You Face Legal Challenges Trust a Knowledgeable Attorney SCHEDULE A FREE CONSULTATION

The Proper Approach To Trust Administration In Cobb County Georgia 

Sept. 15, 2022

Here in Georgia, administering a trust requires a certain amount of responsibility that every trustee should make sure that they are ready to take on. Even with such preparation, administering trusts can still be a daunting and overwhelming task. Trust administration requires a mix of personal integrity, business savvy, and interpersonal skills. Two adults setting up a trust with an attorney

This is because a trustee’s role is to manage the trust assets, make all important decisions, and act as a legal representative of the trust. While there are many distinct types of trusts, the duties of a trustee in each type remain largely similar and consistent. 

There are many different types of trusts, each with its own set of duties. For example, a spendthrift trust protects the beneficiary from creditors by placing restrictions on how much money they can spend and how often. A trustee in a spendthrift trust has to take care of the beneficiary’s financial affairs. A guardian trust is used to protect children who are too young to care for themselves and make important decisions about their lives. A trustee in a guardianship trust has to make sure that their ward is properly cared for and protected. 

What Is Trust Administration? 

There are many types of trusts, and each has its own distinct set of rules. However, there are some common aspects that apply to all types of trusts. For example, every trust administration is a fiduciary responsibility—meaning that the trustee must act in the best interests of the beneficiaries. This can often mean choosing between two equally good options when making decisions on behalf of your client’s trust. 

The relationship between a trustee and beneficiary is also important to understand as you begin to manage their assets through an estate plan or estate administration process. Trustees must always be aware of this relationship and make decisions based on what is best for both parties rather than just their own personal agenda or desires for power over others’ money or property holdings. 

What Is The Proper Mindset? 

When you are appointed as the trustee, it is not your money you are managing. It is trust assets that belong to others. This requires a very different mindset than what most people have when they settle an estate of their own or manage one for themselves: 

  • You must remain impartial and not favor any beneficiary over another because all beneficiaries have equal rights in trust assets. Your emotions, personal tastes, and aversions cannot interfere with how you administer the trust. You, as trustee, are administering another person’s assets, and thus you must adhere to their wishes. There is no distinction between old money and new money, or between relatives and non-relatives (and even strangers may be named as beneficiaries). 

  • You must consider the duties imposed on you by law, such as having insurance coverage for losses due to fraud or mismanagement by yourself or your agents, maintaining records according to strict standards set forth by Georgia law (including keeping minutes from meetings), making annual accounting reports and sending them out to beneficiaries within 60 days after each year ends (this can be done electronically), etc., which will require time spent researching various laws regarding trusts in Georgia so that you will know exactly what needs doing at each juncture along with what documentation must accompany said tasks. 

  • As trustee, you need to make sure that the trust is generating income. Trust funds should not be left stagnant in a checking account. It should be invested to generate income for the beneficiaries. Speaking to a Kennesaw Estate lawyer or financial advisor is a wise decision to figure out any applicable regulations. 

  • You should make it a top priority to remain in contact with all beneficiaries to notify them of the trust’s activity. This includes providing supplementary documentation, such as annual statements of the trust’s accounts. 

  • You can’t be self-serving here; this means that you cannot make decisions that favor you over the beneficiaries. If you feel that you might slip up here, then you should promptly consult a Kennesaw Estate attorney for assistance. 

If you are not prepared, or if you simply do not have the time and energy to invest in this area of legal knowledge, then you will most likely want to hire a lawyer who specializes in estate planning to assist you. 

Identifying Trust Property 

Trust property is anything that the trust owns. This includes assets and liabilities, but it also includes any rights of ownership or control over those assets (e.g., a right to income from an asset). Trustees must identify all trust property before they can sell or distribute it. 

  • The trustee should not have to guess whether something is trust property. If there is any doubt about whether an asset is part of the estate, then it should not be sold or distributed without first getting direction from the court as to whether or not it was part of the original gift from one person to another. 

  • If there are questions about whether something belongs in the estate, you should consult with an attorney who focuses on trusts and estates law in Cobb County Georgia before taking any action on your own. 

Managing Trust Property 

Trust property is separate from the trustee's personal assets. Trustees must act in good faith and for the benefit of the beneficiaries. The trustee may not use the trust property for his or her personal benefit, but he or she may receive reasonable compensation from third parties for services rendered as a trustee. 

The trustee should file an annual report with each beneficiary, so that they can monitor how well their interests are being served by the trust administration. A sample report format might include: 

  • A narrative description of how all aspects of administration have been handled during any prior year(s) covered by this report; 

  • Any material changes in trust assets during such prior year(s); and 

  • Any information regarding disbursements made during such prior year(s). 

Keeping Records 

One of the most important aspects of trust administration is keeping records. The person who has been appointed as trustee must keep accurate records regarding all transactions and distributions made by the trust, as well as any court proceedings that occur. This includes any time a beneficiary receives income or principal from the trust. 

Keep in mind that it may not be required for a trustee to keep detailed records of every transaction made on behalf of a client (although it is highly recommended). However, they should file annual reports with the Georgia Superior Courts where the trust is based so that there can be comprehensive record keeping across multiple jurisdictions. A trustee needs to request a federal tax identification number for the trust and be prepared to file income tax returns for the trust. 

Distributing Assets To Beneficiaries 

Before distributing assets to beneficiaries, you need to be sure that they're ready for the responsibility. If a beneficiary has not yet reached the age of majority, he or she will need help managing their inheritance. Even if they have reached adulthood, they may not be comfortable with handling large sums of money. In either case, it's best to consult an estate planning attorney before distributing assets if there are any questions about whether or not the beneficiary is ready for them. 

Trust Administration Is Important In Georgia. You Need To Be Prepared To Do It Right 

In Georgia, trust administration is a serious responsibility. It requires a mix of personal integrity, business savvy, and interpersonal skills. Trust administrations can be overwhelming and daunting to manage without the right preparation. 

The first thing to do is figure out what kind of person you are going to be as the settlor or trustee when you have your own estate plan in place. You will have the power of attorney over your property and finances if you become incapacitated or die; even if family members disagree with some of your decisions about how assets should be managed during their lifetime or after death (and they probably will), there's not much they can do about it unless they want to challenge your decision in court—which could cost them thousands of dollars out-of-pocket expenses just for starters! 

Trust administration is a complex area of law and requires the right mindset. It’s not something that you can just go out and do without experience. You need to be able to identify property in a trust, manage it properly and distribute it when necessary. If you are thinking about setting up or administering trusts in Georgia, then please contact us today so we can help! If you are struggling under the weight of administering another person’s trust, it is always better to ask for help than to suffer alone until something catastrophic occurs. Give Block Law in Kennesaw, Georgia a call today at (770) 387-4529 and let Jesse Block help you to manage your trust duties securely and efficiently.