A trust administrator, also known as a trustee, holds the trust’s assets and administers them according to the terms of the trust.
Due to the various duties of the trustee, it’s often preferable to hire a professional as administrator for the trust. An attorney or other professional will be free from the conflicts of interest and personal dynamics that may plague a family member or friend.
Stern Perkoski has experience in both drafting trusts and acting as administrator in Evanston, Chicago, Lake Forest and the surrounding suburbs.
What does a trust administrator do?
A trust administrator must implement the terms of the trust and act in the beneficiaries’ interests. However, in addition to administering the trust assets, a trust administrator has a host of duties which define his or her role. These duties include:
- Duty of Loyalty — The duty of loyalty requires the trust administrator to take steps to preserve the trust property, avoid conflicts of interests and personal gain from the management of the trust assets and to not compete with any of the interests of the beneficiaries.
- Duty to Account — The duty to account requires the trust administrator to keep accurate records of all dealings, balances and transactions concerning the trust property.
- Duty to Exercise Reasonable Care — A trust administrator must exercise reasonable care and prudence when managing and investing the trust’s assets.
- Duty to Defend Actions and Enforce Claims — A trust administrator must defend the trust assets against all baseless claims by non-interested parties and pursue that defense vigorously. Where the trust as a valid claim against a third party, the trust administrator must enforce that claim for the benefit of the trust.
- Duty Not to Delegate — A trust administrator may not delegate tasks that he or she could easily perform, thereby ensuring that the trust benefits from the knowledge and skill of the trustee.
- Duty to Keep Trust Property Separate — The trustee must keep the trust property separate from all non-trust property. The assets of the trust must always be clearly identifiable.
- Duty to Pay Income to the Beneficiary — Where the beneficiary of a trust is to receive income, the trustee has an obligation to pay the beneficiary from the trust proceeds, pursuant to any terms and qualifications of the trust.
Does the trust need to be administered by the drafter?
A trust does not need to be administered by the same party who drafted it. Trust administration and trust formation are distinct services.
Contact Our Estate Planning Law Firm in Evanston, Chicago and Lake Forest
To discuss your needs for drafting and administrating trusts in Chicago, the North Shore and surrounding suburbs, contact Stern Perkoski. Request a free consultation online or call us at (847) 868-9584.