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What is a Trust Administrator?

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A trust administrator is a person or organization who has been designated to take care of the trust assets on behalf of the beneficiaries. The trust administrator may be someone specific who has been given this duty, or it may be an organization such as a bank, or a company that specializes in managing trusts. The declaration of trust will specify what the specific duties of the trust administrator will be.

If you need assistance with estate planning and trusts, contact our attorneys at Galanti and Copenhaver. We have many years of experience handling all kinds of issues that often arise during and after the estate planning process. If you have questions regarding your duties for trust administration, we can help. Contact us today to schedule a consultation to discuss your legal needs.

Legal Duties of a Trust Administrator

The trust administrator will have certain duties as set forth in the trust declaration, but there are also some general duties that the trust administrator must do according to the law. If the trust administrator fails to comply with their legal duties, they could potentially have personal liability for any associated losses.

As one of their first duties, a trust administrator must assess the value of the assets of the trust. This is done by first deducting any liabilities of the trust, then determining the value of the remaining assets. The administrator must also determine whether or not the trust has any tax liabilities. If the trust does owe tax, then the trust administrator must pay all of the state and federal taxes that are owed. There may be multiple tax forms that must be filed on behalf of the trust.

Throughout the entire time, the trust administrator is acting in this role, the administrator must act in good faith and in the best interests of the trust beneficiaries. This means that the administrator must act in an honest manner and be fully transparent by disclosing any possible personal gain that the administrator might get from any of their actions on behalf of the trust. If losses are suffered by the trust due to a failure of the trust administrator to uphold this duty, the beneficiaries of the trust may sue the administrator.

A Trust Administrator Must Keep Detailed Records

Another responsibility of the trust administrator is to keep accurate and detailed records of any taxes paid by the trust and any investments made by the trust. The trust administrator should also retain a copy of any correspondence associated with the trust. The beneficiaries of the trust are entitled to review the trust accounts whenever they wish. Many trust deeds require the administrator to provide the beneficiaries with an account of the funds in the trust once or twice a year.

Making Financial Decisions on Behalf of the Trust

The trust administrator for a trust is also tasked with making investments on behalf of the trust and other financial decisions that may arise. Under the law, a trust administrator is required to make prudent financial decisions and not make any risky investments. Unless specified otherwise in the deed of the trust, the trust administrator is required to treat every beneficiary equally and fairly. The trust administrator cannot favor one beneficiary over another.

A Trust Administrator is Entitled to Compensation from the Trust

As there are many duties and requirements that the trust administrator must comply with, as well as a lot of work involved, a trust administrator is entitled to compensation for fulfilling this position. The trust declaration may specify the compensation of the administrator or trustee, but if compensation is not addressed in the trust declaration, the administrator is entitled to reasonable compensation by law. Depending on the circumstances and how the trust addresses this issue, the trust administrator or trustee may need a court order to receive their proper payment.

Finalizing the Trust and Concluding

A trust is terminated when the event specified in the trust declaration occurs. The trust administrator will have paid any required taxes and handled any creditor issues by the time the trust is ready to be closed. The main task at this point is for the trust administrator to distribute the funds to all beneficiaries according to the terms of the trust. The administrator is given a reasonable period of time after the trust ending event to make the distributions from the trust to the beneficiaries. 

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