One of the biggest responsibilities in life that one can take on for a friend or loved one is to volunteer to be the administrator for a trust. Unfortunately, many people who take on this responsibility do not understand the need to be prompt and timely in administering the trust. It is important to properly and timely administer a trust because courts mandate it, it helps guarantee maximum beneficiary benefit, and it allows for simpler administration.
The first reason that timely trust administration is imperative is because there are often deadlines placed on an administrator by the court. These deadlines are placed to keep the trust administration process going smoothly. The court will expect to see your plan for administering the trust, place deadlines on the time for when different payments and accounting by the trust should be made, and provide some general oversight over the trust administration process.
Ensure Beneficiaries Receive Their Maximum Benefit
A second reason that timely trust administration is important is because it is important to get the beneficiaries of the trust their maximum benefit. The longer it takes you to administer the trust, the higher the accountant costs and legal fees go, draining money out of the trust that should have been given to a beneficiary. Further, a burdensome reality exists in the tax code. Trusts are generally taxable as far as income and capital gains taxes go, and the trust administrator is going to have to deal with the problems that arise under that and be responsible for the tax returns for the trust. This can be somewhat avoided by making sure that the trust is administered in a timely manner.
A final, and somewhat practical, reason for a timely administration of a trust is to follow out the wishes of the person who placed you as administrator in a timely manner. If the trust is not administered in a timely manner, then there wishes are not being followed and you could be found in a breach of duty, which could have personal consequences to a trust administrator depending on the situation.
To conclude, it is important to administer the trust in a proper and timely manner because courts often mandate it, it allows beneficiaries maximum benefit, it is simpler administratively, and it allows an administrator to avoid potential liabilities.
If you are interested in more information about trust administration, then contact Stevenson Law Office by giving us a call or by filling out the form on our contact us page.