A trust is something in the law that involves a financial connection between three different parties. This includes the trustor, the trustees, and the beneficiary. Trust administration refers to what the trustees have to do in order to fulfill their roles. Here’s some information about how all this works.
Definitions of Terms
A “trustor” refers to whoever is setting up the trust. A trust itself is an account of money or other assets that the trustor wants to entrust to the beneficiary. So essentially, the trustor wants to leave stuff to a particular person or group of people. They want to do so in a way where the fund or trust will still be a separate legal fund even after the trustor themselves is dead. So, they give everything to the trust, and then they appoint “trustees,” who are the overseers of the fund, or trust.
It’s the trustees’ job to oversee a fund. They have to take care of all of the details related to it in order to make sure the beneficiary, or the person who the trustor wanted to receive the fund, gets it in the way intended. This is actually complicated enough that many experts say it’s good to work with attorneys if you’re the trustee of a fund.
The trustees are actually the legal owners of the trust until they make the transfer. So, they have to manage the trust in order to make sure that the trust is well-maintained, handling any fees associated with the trust, whatever interest it gathers, and any other matter that comes to the fore. Another big thing that a trustee has to do is stay in communication with the beneficiaries. Being a trustee is a voluntary position, you don’t absolutely have to do it. But many people want to serve as a trustee in order to be able to help the beneficiaries and make sure that everything works out there.
Communicating constantly with beneficiaries is important because they are going to get antsy about how the trust is going. Many people may need to depend on the trust in some capacity for their living. Not all trusts pay out everything right away. They may send funds to beneficiaries a bit at a time over their lives, and then get refilled from outside means or just from interest if the fund is big enough.
It’s also important to keep in mind that you shouldn’t do anything in a secretive manner as a trustee. You have to be upfront about every little thing you do in order to manage the trust since the beneficiaries are the ones who really own it. Those who don’t operate in absolute transparency, could not only end up being removed from being a trustee, operating a fund in bad faith can actually land you in serious legal trouble with huge fines and even jail time. It is a serious thing to do without a doubt.