Long Island Trust Administration

A trust is a legal arrangement the creator of the trust, the trustee, and the beneficiaries of the trust. The trustee is responsible for the administration of the trust for the benefit of the beneficiaries based on the terms of the trust document. However, the trustee must also understand rules that he or she must follow that are found in New York Estates, Powers, and Trusts Law. Managing trusts can be complicated. To ensure you are fulfilling your responsibilities as required by law, contact an experienced Long Island trust administration lawyer who will explain to you how a trust works and what you are required to do as the trustee.

A trustee takes legal title of the property in the trust, and holds it for the benefit of the beneficiaries. So the trustee has legal title of the property while the beneficiaries have beneficial title. The trust is defined by the terms of the trust as stated in the trust agreement, as well as New York and in some cases, federal law.

The terms of the trust agreement give the trustee instructions related to how the trustee is supposed to manage the property. For example, a grantor may transfer $100,000 cash into a trust for the benefit of George. The trustee is John. The trust agreement might say that John as the trustee must distribute money from the trust to George only to pay for George’s college expenses.

Based on the terms of the trust, there are a wide range of activities that a trustee may be required to perform. Some of the general activities often required by trustees include:

• Distribution of assets
• Manage property
• Make investment decisions
• Record keeping
• Communicate with beneficiaries
• Tax reporting and compliance, including filing state and federal tax returns
• Document decisions

All of the activities of the trustee are based on serving the interests of the beneficiaries. As a Long Island trust administration lawyer will explain, although the trustee is not required to personally handle all of these duties, he or she is ultimately responsible.

The trustee has a relationship of trust with the beneficiaries. This is referred to as a fiduciary relationship. The trustee will be held to the highest standards for all of his or her actions in his role as trustee. In fact, the trustee is accountable to the beneficiaries. If the fiduciary breaches his or her fiduciary duty, the trustee will be legally liable to the beneficiaries for any damage that the breached caused them.

• Duty of loyalty. This means that a trustee is prohibited from self-dealing. The trustee cannot benefit from the trust, other than receiving reasonable compensation for performing duties as trustee. For example, a trustee cannot take a loan from the trust for him or herself. Likewise, it would be a breach of duty for the trustee to lend money from the trust to a friend or family member.
• Duty to deal impartially. The trustee must not treat beneficiaries differently. However, the trustee is permitted to use his best judgment in making decisions in dealing with the beneficiaries, and the trustee must use the terms of the trust as a guide as to how to treat beneficiaries. For example, the trust document might require the trustee to treat beneficiaries differently. In this case the trustee would be following the wishes of the grantor.
• Duty to prohibit commingling. The trustee must not mix his personal property with trust property.
• Duty to protect trust property. Depending on the type of property, this may mean that the trustee must get adequate insurance for such property as real estate or jewelry.
• Duty to make trust property productive
• Duty to furnish information to beneficiaries. The trustee must keep good accounts and records of all activities related to trust property and actions related to beneficiaries.
• Duty to exercise reasonable care and skill. The trustee must handle trust matters with the same skill and care that a person with ordinary prudence would exercise in the care of his or her own property.

Trusts can be divided into different categories. A trust can be revocable- meaning that the grantor can cancel or change it at any time, or irrevocable- meaning that the grantor cannot easily cancel or change it. A trust can be living- meaning that the grantor creates and funds it during his or her lifetime, or testamentary- meaning it is created and funding by a last will and testament after the death of the testator. There are also special types of trusts. There are several different types of trusts established to accomplish different goals. An experienced trust administration attorney in Long Island will be able to determine which type of trust would best fit your needs. Examples of types of trusts include a minor child trust. A minor child trust is designed to hold the assets of minor child who does not have the maturity to manage his own assets. The trustee would be responsible for manage the assets and making distributions for the child’s needs. Such trusts often end when the child turns 18 or 21. At that time the balance of the trust assets are typically distributed to the beneficiary. However, the terms of the trust may provide for distribution of assets at intervals over several years.

A spendthrift trust is designed to provide for and preserve assets of a beneficiary who cannot be trusted to care for his or her own assets. For example, the person may have a track record of making poor financial decisions. Or, the person may be struggling with a gambling or drug addiction. The grantor wants to make sure that the beneficiaries needs are cared for without allowing the beneficiary to waste the assets. Spendthrift trust as designed so that the beneficiary’s creditors cannot touch the assets.

Another type of special trust is called a special needs trust, also referred to as a supplemental needs trust. It is designed to preserve asset of an individual with a disability in order to pay for his or her care. Such a trust is also designed to ensure that the disabled person qualifies for governmental benefits, despite having access to assets that would put the disabled person above the qualifying asset threshold.

Oftentimes the role of trust administration may fall on a trustee as a surprise when someone passes away. To ensure that you understand the terms of the trust document as well as the law related to trust administration, it is imperative that you get in touch with an experienced trust administration attorney serving Long Island. The attorneys at the Law Offices of Stephen Bilkis & Associates have extensive experience representing clients in complex trust matters as well as other estate matters such as estate administration and estate litigation. Contact us at 800-696-9529 to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: Long Island, Queens, Bronx, Brooklyn, Manhattan, Nassau County, Staten Island, Suffolk County and Westchester County.