Mannor Law Group: Assisting Grand Blanc, MI, With Trust Administration

Most of our clients choose to incorporate trusts into their estate plans to better protect their assets and leave legacies for their loved ones. A revocable living trust can help avoid probate, which may bypass the probate process, a court-supervised process that can be lengthy and costly without an estate planning plan, and it can be altered during the grantor’s lifetime because it offers flexibility in how assets are distributed. However, any trust is also a fiduciary relationship, and trust administration is a specialized fiduciary process. In many cases, you will need qualified legal representation from a law office committed to the optimal results and your peace of mind.

Our Grand Blanc trust administration lawyers at Mannor Law Group, PLLC are a firm with the expertise to provide estate planning services in Grand Blanc, MI, and throughout Genesee County, and local reputation matters when choosing counsel. We can ensure the intentions of the trustor are honored while complying with Michigan laws, tax regulations, and fiduciary duties. We are intimately familiar with how to efficiently and effectively administer trusts and can help avoid common mistakes that lead to significant problems.

Understanding the Role of the Trustee in Trust Administration

A person who forms a living trust is called a trustor or grantor. They define the terms of the trust and decide what assets are placed in it. Because a trust is a type of fiduciary relationship, a trustor must then appoint a trustee to manage the affairs of the trust, whether that trustee is an individual or a professional entity. You will typically appoint yourself to be your own trustee during your lifetime.

The trustee is responsible for following the instructions of the trustor while honoring all state and federal laws that govern trust administration. Managing a trust, especially one involving a large variety of assets, can be a complex process that requires precise administrative steps, financial knowledge, and compliance with relevant regulations. Fiduciary responsibilities and how assets are distributed can also vary significantly depending on state law and the specific circumstances involved.

Trustors should avoid appointing a trustee who is unfamiliar with the process of trust administration. Failure to appropriately manage a trust can result in harsh financial penalties, and beneficiaries may hold a trustee personally liable for administrative errors. Depending on the nature of the negligence or offense, a trustee can even be held liable for any harm caused to the trust as a result of their mismanagement.

If a family member has been asked to serve as trustee, you should consider scheduling an initial consultation with a legal representative to understand the risks and responsibilities involved. We can assist you in carrying out your duties and guide the trust administration process.

Key Responsibilities of the Trustee After the Trustor’s Passing

One of the chief advantages of placing assets in a trust is to avoid probate, rather than going through the probate process, a court-supervised process for transferring assets after death. The trustee assumes control over trust assets immediately upon the passing of the trustor. They must then complete all legally mandated steps and distribute assets to the trust’s named beneficiaries.

Typical trust administration responsibilities include taxes, accounting, and creditor notifications, such as:

  • Notifying trust beneficiaries and creditors
  • Inventorying trust income, assets, and property
  • Publishing legal notice per Michigan law
  • Distributing assets per the instructions of the trustor
  • Facilitating the sale of some assets
  • Paying the final expenses of the deceased
  • Filing tax returns of the trustor and making any necessary payments
  • Providing a final accounting of the trust to all heirs and beneficiaries.

Trust administration can take several months to complete, depending on the size and complexity of the trust.

Our Grand Blanc trust administration attorneys at Mannor Law Group, PLLC, understand how local probate experience helps streamline administration in Michigan, including matters that may intersect with long-term care guidelines, and can assist you in navigating what can be a difficult process. We can work with any existing advisors or personal representatives to ensure the directives of the trust are fully honored and accurately executed.

What Should You Not Put in a Revocable Living Trust?

Estate planning can involve several trust options, and a living trust is one way to transfer assets such as real estate, investments, personal property, money, and other assets into a trust to be managed by a trustee for the benefit of your family and other beneficiaries. However, certain types of assets should not be placed into a living trust, including:

  • Retirement accounts, such as 401(k)s and IRAs. These accounts have special tax benefits and are better left outside of the trust.
  • Life insurance policies. Putting a life insurance policy into a trust can cause it to lose its tax-free status upon the death of the insured.
  • Assets that need to be managed for a specific reason. For example, if you have a special needs child, you may want to create a special needs trust to manage assets for their benefit. A special needs trust can preserve government benefits while trust funds cover supplemental needs.
  • A testamentary trust is created through a will, activates at death, and is often used to manage assets for minor children.
  • Charitable trusts can support your chosen charities and may offer potential tax benefits or potential tax advantages.

Additionally, it’s important to note that a revocable trust offers flexibility and can be changed during your lifetime, while an irrevocable trust may be the right choice for enhanced asset protection and to secure your legacy, depending on your specific goals and circumstances. It’s recommended to consult with an attorney to make sure your wishes are reflected in your estate planning, including wills, and to decide which trust structure is best so the state does not decide how property is distributed.

Grand Blanc Trust Administration FAQs

What is trust administration?

Trust administration is a specialized fiduciary process involving the ongoing maintenance and management of a living trust, ensuring that the intentions of the trustor are honored while complying with Michigan laws, tax regulations, and fiduciary duties. Fees may be structured as flat fees, hourly rates, or a percentage of the trust estate.

What does a trustee do after the trustor passes away?

After the trustor’s passing, the trustee assumes control of the trust assets, notifies beneficiaries and creditors, inventories trust property, distributes assets per the trustor’s instructions, files taxes, publishes legal notices, pays final expenses, and provides a final accounting.

What should not be placed in a living trust?

Certain assets should not be placed in a living trust, including retirement accounts like 401(k)s and IRAs, life insurance policies that could lose their tax‑free status, and assets that should be managed through specialized vehicles like special needs trusts, which can help preserve government benefits while providing for supplemental needs. An attorney can help determine which trust vehicle best fits your circumstances and specific goals.