The process of administering a trust
A trust is a beneficial estate planning tool as it allows one to set aside and protect his or her assets for a specific use. When putting assets in a trust, the individual is placing control over those assets in the hands of a third party. The third party oversees and manages the assets for the benefit of another party, known as the beneficiary. A trust is a practical way to ensure appropriate use of your Florida estate assets according to your wishes, even long after you pass.
If you establish a trust or are the beneficiary of a trust, you may wonder how the trust administration process will work. The specific details of what you can expect from this depends on the type of trust you have and the instructions left by the individual who created the trust. Understanding the trust administration process may provide you with an understanding of what to expect and how you can minimize the complications associated with the management and distribution of trust assets.
The role of each party
It is helpful to understand the role of the three main parties involved with the trust administration process. They are the trustee, beneficiary and the settlor. The role and responsibilities of each of these include the following:
- Beneficiaries: As the name suggests, the beneficiary is the individual who will benefit from the assets held in the trust. A beneficiary may be a minor heir, special needs adult, charitable organization and more.
- Trustee: A trustee is the individual who is responsible for overseeing and managing assets held in the trust. The trustee has the fiduciary duty to act in the best interests of the beneficiaries of the trust.
- Settlor: The settlor is the individual who creates the trust. He or she decides on who will act as the trustee and what parties will be the beneficiary of the trust. Some types of trusts allow the settlor to act as a trustee until his or her death.
Whether you are establishing a trust, will oversee a trust or are a beneficiary of a trust, there is a benefit in understanding how trust administration works. Regardless of your specific role, you will find it helpful to seek an assessment of your case and explanation of your rights, responsibilities and reasonable expectations.