What Is Trust Administration? A Step-By-Step Overview for New Trustees

If you’ve just been named a trustee, you might be wondering, “What exactly am I supposed to do now?”

Well, there’s a name for your job, and it’s called trust administration.

Trust administration is the process of managing and settling a trust after the person who created it has passed away. If you’re reading this, you’re probably a trustee, which means it’s your role to follow the instructions given in the trust, protect the assets, pay any required bills or taxes, and then distribute property to the beneficiaries. 

It might sound like a lot, and you might be unsure where to start. That’s alright, the good news is that it’s a straightforward process. Here’s what you should do, step-by-step:

The Core of Trust Administration

Trust administration is just about carrying out someone else’s wishes. The person who created the trust laid out instructions for what should happen to their assets after they die. Your hat is to make sure those instructions are followed fairly and properly. 

Unlike probate, trust administration happens outside of court, which means it’s usually quicker, more private, and more flexible. But there are still rules to abide by. Trustees always have legal responsibilities, and skipping steps (or going out of order) can cause major problems later on. 

Step 1: Find and Review The Trust Documents

The trust will explain:

• Who the beneficiaries are

• What assets are part of the trust

• When and how distributions should be made

• What powers and responsibilities you have as trustee

Take your time to review it. Every decision you make as a trustee should tie back to what the trust says. 

It’d also be a good idea to get other key documents early, such as death certificates, account statements, deeds, insurance information, and any related estate planning information.

Gathering these documents early gives you the authority and information you need to access accounts, identify trust assets, and handle transfers, debts, and taxes without any delays. It also protects you as a trustee by creating a clear paper trail that supports your decisions and shows why you made them. 

Step 2: Notify Beneficiaries That You’re the Trustee

Beneficiaries should all be notified that the trust exists and that you are serving as trustee. This is the first step to keeping open communication with all interested parties of the administration.

Step 3: Secure Trust Assets

At this stage, your job is to figure out what the trust owns and where everything is. This usually means looking through paperwork, mail, emails, and financial records to find bank statements, investment statements, property documents, and insurance information. You may also need to contact banks or insurance companies and let them know the trust’s creator has passed away and that you are the trustee.

Trust assets often include bank and investment accounts, real estate, business interests, vehicles, and personal belongings. Some items may already be titled in the name of the trust, while others may still be in the individual’s name and need to be addressed.

Once you know what assets exist, you need to protect and manage them. That might mean moving money into a trust account, making sure homes are locked and maintained, confirming insurance policies are active, and keeping valuable personal items safe. It can seem like a lot, but the goal is simple: prevent loss, damage, or misuse while the trust administration process is underway.

Step 4: Get a Tax ID and Set Up a Trust Bank Account

After the person who created the trust passes away, the trust usually needs its own tax identification number. It’s like a Social Security number, but for the trust. Banks, investment companies, and the IRS use this number to track income, report taxes, and recognize the trust as a separate legal entity. 

Once you have the tax ID, the next step is opening a bank account in the trust’s name. This account becomes the trust’s central checking account. Any income the trust receives (such as rent, interest, dividends, or refunds) should go into this account. Likewise, trust-related expenses like property upkeep, bills, taxes, and professional fees should be paid from this account.

You never deposit trust funds into your personal account or use your personal money to cover trust expenses, because mixing them makes it hard to track transactions and can make you legally responsible for mistakes. A separate trust account keeps everything clean and organized, which protects both you and the beneficiaries throughout the trust administration process.

Step 5: Handle Bills, Debts, and Ongoing Expenses

Before you give any assets to beneficiaries, the trust must take care of all obligations, such as:

• Final bills (utilities, credit cards, medical bills)

• Ongoing household expenses (mortgage, property maintenance, insurance)

• Valid debts the deceased owed

• Administrative costs (lawyer fees, accountant fees, appraisal costs)

How you handle this: start by collecting all bills and statements. Verify each claim to make sure it’s legitimate, and pay from the trust bank account you set up earlier. Keep a record of every payment. This step often takes longer than people expect because bills and debts can surface over time. Rushing asset distributions before these fees are paid can potentially create legal problems down the line. 

Step 6: Manage the Deceased’s Taxes

Trusts can owe taxes, and it’s your job as trustee to make sure they’re paid correctly. This can involve:

• Filing the final personal income tax return for the deceased

• Filing the trust’s own income tax returns

• Paying any taxes due from the trust’s assets

How to do it: gather all financial records, bank statements, and income reports. Make sure the correct forms are filed on time. For most first-time trustees, this can feel confusing—tax rules are tricky, and mistakes can be costly. Many trustees get help from an accountant or estate planning attorney to make sure everything is done correctly. We recommend that. 

Step 7: Keep Detailed Records and Accountings

Throughout the trust administration process, it’s important to document everything you do. This includes:

• All money coming into the trust (income, refunds, deposits)

• All expenses paid from the trust

• Decisions you make as trustee (disputes, approvals, changes)

• Distributions made to beneficiaries

How you do this: maintain a spreadsheet or notebook dedicated to the trust. Keep receipts, statements, and notes for every action. Many trusts need you to provide a formal accounting to beneficiaries. Even if not required, keeping detailed records protects you from questions or disputes and helps beneficiaries trust that you are handling the process responsibly.

Step 8: Make The Distributions to the Beneficiaries

Once all debts, bills, and taxes are paid, you can distribute the remaining assets to the beneficiaries. How and when you distribute depends entirely on what the trust document says.

Some trusts allow beneficiaries to receive their share immediately. Others require payments over time, or only after certain conditions are met. 

Follow the trust instructions exactly. Do not give out more or less than what’s specified, and resist pressure from beneficiaries to speed things up. Proper distributions ensure the trust’s intentions are honored and that you are legally protected as trustee.

Step 9: Close Out the Trust

Some trusts are designed to end once all assets are distributed. Others continue to exist for many years. If the trust is meant to close, final steps include: reviewing all records, making sure everything is settled, and communicating with beneficiaries that the trust is officially complete. Once these steps are done, your role as trustee comes to an end.

How an Estate Planning Attorney Can Help

After reading all nine steps, by now you might feel overwhelmed. We understand, and even though you are named the trustee, you don’t have to do this administration alone. An estate planning attorney who deals in trust administration, like our team here at Denebeim Law, can help you through every step and ensure everything is done properly, while making sure you don’t get stressed by the steps. 

An estate planning attorney can: 

Gather and organize documents: Attorneys can help locate important papers, identify assets, and ensure everything is properly accounted for.

Handle taxes and legal filings: Trustees are responsible for tax returns and reporting. An attorney can help prepare filings correctly, avoiding mistakes or penalties.

Communicate with beneficiaries: Attorneys can advise on how and when to notify beneficiaries and help prevent potential conflicts.

Provide guidance on distributions: They ensure assets are distributed according to the trust’s instructions, whether immediately or over time.

Protect the trustee from liability: By following legal requirements and best practices under the attorney’s guidance, you reduce the risk of mistakes that could cause personal responsibility.

…And there you go! We hope this article was of use to you. If you have further questions or would like to hire a trust administrator attorney, feel free to contact us today.