The challenges associated with trust administration

When an individual in Sacramento passes away, the directions that he or she laid out in his or her estate plan kick into effect. Whether a will, trust or some combination of both is used in an estate plan, the administration of the estate and its trusts can be challenging. After all, trusts and other estate matters that are mishandled can result in the imposition of personal liability.

One key area to pay attention to is the payment of debts and distribution of trust assets. Generally speaking, an estate's debts should be paid before any money is paid out of the trust. This is because a trust administrator may have to personally pay for debts that the estate is unable to cover if beneficiaries and heirs have already received assets from the estate. Also, trusts typically allow for the payment of income, which is money earned through the investment of trust assets, to be paid at one time, while the principal of a trust is to be paid at another time with, perhaps, strict qualifications in place. This means that a trust administrator needs to be careful about how and when to pay out assets, as well as how to invest those assets.

There are a number of other issues that a trust administrator or estate executor need to be mindful of. For example, taxes must be filed correctly, and they need to be careful that they do not engage in self-dealing. Failing to appropriately consider these matters can lead to negative consequences that can be detrimental to both the estate and the executor.

Trust administration can be fraught with difficulties and legal issues. If, after careful consideration, one decides to act as an executor or trust administrator, then it is important for one to ensure that they uphold their fiduciary duties in order to avoid personal liability.

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