Operating a Trust: Short Checklist

Operating a Trust: Short Checklist

By: Martin M. Shenkman, CPA, MBA, JD

How do I administer a trust?

  •  Financial: Investment policy statement (IPS) which considers unique trust goals, planned distributions and needs, risk profile, relationship to other family investments, specific trust instructions.
  • Legal: Review trust for provisions applicable to administration, far different than the perspective taken when planning and drafting the trust. Who is counsel representing? Trustee, beneficiaries, trust, grantor? Changes in law that impact trust situs, administration, etc. E.g., enactment of provisions requiring disclosure to beneficiaries, etc.
  •  Estate Planning: What were estate planning objectives of trust and how have they changed. Eg., QPRT done with $600,000 exclusion, perhaps should be treated as life estate to cause estate inclusion if client no longer subject to estate tax. Notification of beneficiaries, meetings/minutes.
  • Accounting: Informal or formal accounting for trustee, maintaining grantor trust status; determination of income versus principal; reviewing beneficiary resources if trust requires or authorizes consideration. Insurance: Property, casualty and liability - Insuring trust assets properly - e.g., naming trustee and trust, often overlooked. Life insurance periodically reviewed.
  • Other: What is unique to the trust? Example - commercial real estate might warrant a consultation or report from an appraiser, real estate consultant, etc. to demonstrate trustee is carrying out fiduciary duties.
  • Conflicts:
  • Investment strategies, tax, asset protection and other goals often conflict.
  • Parent/grantor may want to encourage child's involvement in family business in part held by trust but will this taint trust in the event of a future matrimonial problem?

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