Trust Administration

Trusts have been used as integral parts of a person's particular estate plans. A trust is an arrangement in which legal title to property is held by one person who manages it for another's benefit. A trust can be set up to benefit the person who created it (known as the grantor), it can be set up for beneficiaries named by that person, or both. Trusts can be set up to operate during the grantor's life or as a testamentary trust set up within the grantor's Will. They can be revocable or irrevocable. A revocable trust gives the grantor the flexibility to revoke the trust at any time, where an irrevocable trust does not. Trusts can help you manage your property and investments for your intended beneficiaries either during your lifetime or post death.

A trust needs a suitable person to act as trustee and manage the trust administration pursuant to a trust agreement and trust laws. Some trust allows the grantor to serve as trustee. Some trustees are a family member, friend, professional adviser, or financial institution. Every trustee is a fiduciary and every trustee has certain duties that must be strictly respected. These duties include:

• the duty to carry out the terms of the trust agreement;
• the duty of loyalty to the beneficiary;
• the duty to act and invest prudently;
• the duty not to delegate trustee responsibilities; and
• the duty to maintain books and records and keep the beneficiary reasonably informed of the trust administration.

Perhaps the most significant duty of a trustee is that of undivided loyalty to the primary beneficiary. The trustee must administer the trust solely in the best interests of the primary beneficiary and exclude from consideration his or her own advantage and the welfare of any other person. Because the trustee is in a position of such confidential relationship with the primary beneficiary and has such control over her property, a trustee is held to a higher standard than would prevail in an ordinary business transaction. A trustee of a supplemental needs trust invests and manages assets for the benefit of the primary beneficiary without such property being considered as belonging to him or her. That way, the Trust will not interfere with his or her eligibility for Medicaid, Supplemental Security Income or other public benefits programs.

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