Administering a Trust

If a family member has made a living trust part of his or her estate plan, you may be called upon to administer or manage the trust. This will happen if the trust names you as the Successor Trustee.

Here are a few things you need to know:

• While Your Family Member is Alive and Well. Your family member who created the trust will be the Trustee and will manage the trust assets for his or her own benefit – just like any non-trust investment or bank account that he or she owns. Trust income or loss will be reported on the Trustee’s personal 1040 tax returns.
• If Your Family Member Becomes Incapacitated. As Successor Trustee, you’ll likely take over the management of the trust while your family member is incapacitated. When the family member has recovered, he or she will resume managing the trust.
• When Your Family Member Dies. As Successor Trustee you’ll now be in full charge of administering the trust. Typically you’ll pay final bills, consolidate trust assets, and distribute them according to the terms of the trust. You’ll also file a tax return on behalf of the trust, which will report any trust income.