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3 tips for trust administration in California

An appointment as a trustee is more than just a compliment, it is a big responsibility. Responsibilities inherent to this position include the management of the assets held within the trust and distribution of the assets as detailed by the trust documents.

Navigating the rules and expectations can be difficult, but the following tips can help:

  • Read the documents. Take the time to read through the documents associated with the trust. What is the purpose of the trust? Who are the beneficiaries? If you are not already aware of the assets held in the trust, find out.
  • Invest wisely. Trustees are generally required to invest in line with the state’s prudent investor rule. This can include a number of expectations that must be met while investing the assets. One example outlined by the Prudent Investors Network for California is the requirement that management of the risks is completed at the portfolio level, as opposed to the individual asset level.
  • Do not forget the IRS. As noted in a recent piece by the American Bar Association, it is also important that the trustee remember the trust may be subject to tax obligations to the Internal Revenue Service (IRS). The fiduciary for the trust may need to file an annual income tax statement. This from is known as Schedule K-1.

It is not an easy task to manage these points in addition to dealing with beneficiaries. As a result, it is not uncommon for those who are named as trustees to seek professional guidance.

In this situation, it is often wise to seek the counsel of an attorney experienced in the responsibilities of trustees. This legal professional can aid in the management and distribution of these legal tools. 

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