TRUST ADMINISTRATION
Being named as trustee of an irrevocable trust, whether that is to manage assets on behalf of someone else or for yourself, involves responsibilities that are not readily apparent. Prudent investment management, distribution decisions, and tax reporting obligations are core features of the job. The best way to ensure a smooth experience for the trustee and beneficiaries is to build your administration practices on a strong procedural and legal foundation, understanding what is required by the terms of the document and by underlying law, and also what is within a trustee's discretion.
Schooley Law Firm is here to help relieve the burden and leverage our decades of experience to help you navigate this job efficiently and effectively. However, if you are well into your term as trustee and have encountered new problems, we are here to help you get back on track.
Let Schooley Law Firm help make the experience of serving as a trustee or receiving the gift of an inheritance pleasant for you. Take a read below of common elements we help our clients with and call us today to set a meeting.
Some trusts are written with very specific instructions for distributions, but more often there is some degree of discretion the trustee is empowered to exercise. Trustees often have trouble deciding when, and in what circumstances, to make distributions for their beneficiaries, or they do not understand their obligations to both current beneficiaries and remainder beneficiaries. We can help by reviewing the language of the trust and providing advice about the level of discretion a trustee is possessed with, as well as advising the trustee of other obligations he or she has in order to protect the trustee from liability. If you are a trust beneficiary, we can help you understand the breadth of the authority a trustee has to make distributions to you, the information you are entitled to receive, and the possibilities for resolving any disputes.
Accounting: Virginia law gives certain individuals the right to request annual reports about the trust’s finances from the trustee. Thus, keeping accurate records is not only prudent, it is required. If you as a trustee have been presented with such a request, we can help you understand which receipts and expenses are charged to "income" versus "principal" and guide you while you prepare the reports.
Taxes: Just like individuals and estates, trusts are obligated to file income tax returns if they generate income of $600 or more. This is an important requirement to comply with and ignoring it can cause future trouble for the trustee and beneficiaries, including tax penalties. Ordinary income and gains of the trust may be taxed to the grantor, beneficiaries, or the trust itself. Start by getting the right advice from the outset to know your reporting and payment obligations. If you are a beneficiary, learn what to expect and how to reserve appropriately for your share of the income taxes.
When it’s time to terminate a trust and distribute its assets, many trustees have questions about their final obligations and how to relieve themselves from any liability. Sometimes beneficiaries are hard to locate or difficult to engage, and other times they may be anxious to receive a lump sum while the trustee is still trying to wrap up responsibilities. If you need help, have questions, or just would like to smooth the lines of communications while getting results, we are here to assist.