For many people, funneling certain assets and property into trusts is an essential part of the estate planning process. This could be because they want to protect their assets from creditors, minimize tax liability, and ensure their family is financially stable after their passing. However, when the time does come to distribute trust assets to beneficiaries, the process for doing so can be complicated and even controversial, depending on the circumstances.
Whether you are responsible for administering a trust or if you are seeking assets as a beneficiary, it is in your best interests to have a dedicated attorney help you achieve your goals. A qualified Cary trust administration lawyer could explain your rights and obligations under state law and ensure the process goes as smoothly as possible.
Under North Carolina General Statutes §36C-8-815, a person designated as a trustee may take any action specifically prescribed in the terms of the trust they oversee without having to seek court authorization first. However, state law also establishes the duties and expectations trustees must fulfill to avoid liability for breach of trust.
First and foremost, trustees are obligated to administer trusts in good faith based on the wishes of the person who created the account and the best interests of the beneficiaries. This entails separating the trust’s assets from their own or anyone else’s, keeping appropriate records of administrative activities, and protecting the trust from improper claims.
Trustees also have a duty to ensure assets within a trust are productive, which usually means making prudent investments in the beneficiaries’ best interests. However, N.C. Gen. Stat. §36C-8-807 allows a trustee to delegate investment-related activities to qualified third parties only if doing so would constitute reasonable care for the contents of the trusts. A legal advisor who understands trust administration could help with various managerial elements of the distribution process in Cary.
In addition to the duties they must follow under the law, trustees in Cary have a lot of responsibilities during the trust administration process. They must obtain whatever legal documents are necessary to ensure the trust’s validity, collect any monies that third parties might owe the trust while also paying off the trust’s own expenses and debts, accurately appraise the value of various trust assets, and even file tax returns on behalf of a deceased trust grantor.
Most importantly, trustees are responsible for distributing the contents of a trust to the beneficiaries once the grantor passes away. This must be done either in accordance with the grantor’s last will and testament or with instructions included in the terms of the trust. This process can be especially complex without assistance from a local trust administration professional, so seeking legal counsel before beginning distribution begins may be in the best interests of the trustee.
Administrating a trust might seem simple on paper, but in reality, the process can stretch on for months or even years in some cases. Taking inventory of assets and dealing with federal requirements could take longer than most people realize. On top of that, avoidable delays can also plague the trust process without legal guidance. It is important to work with an attorney to ensure that a trust is administered in a reasonable timeline and without error.
State law requires a trust administrator to do their work in good faith and to represent the best interests of the beneficiaries. This is typically done by following the terms of the trust documentation. However, state law also sets out three specific principles a trustee must abide by when overseeing the assets of the trust. These principles are loyalty, impartiality, and prudent administration.
Loyalty requires the administrator to make decisions based on what is best for the trust and its beneficiaries, instead of the administrator’s needs. Impartiality means that the administrator cannot play favorites when dealing with these assets. Finally, prudent administration requires a trustee to maintain a basic level of competence when dealing with assets that belong to the trust.
There is no formal requirement for a trust administrator to hire legal counsel when completing their duties. However, there are steep penalties for errors or misuse of funds during the administration process. An attorney could help a trust administrator avoid challenges from beneficiaries or accusations of wrongdoing by ensuring compliance with the law and trust documentation. In reality, most trust administrators care deeply about the creator of the trust and want their final wishes to be properly carried out. Experienced legal counsel could help achieve this.
Administering a trust can be an exhausting task and there are numerous ways in which small mistakes could have significant implications for trustees. If you are responsible for managing or administering a trust, advice from an experienced legal professional could go a long way toward ensuring you are able to fulfill your responsibilities effectively and efficiently.
A consultation with a Cary trust administration lawyer should be high on your list of priorities whether you are a trustee, a beneficiary, or a grantor with questions about how the administration process will go after your death. Learn more by scheduling a confidential consultation today.