In the case of an individual passing without establishing a will, or there are assets not accounted for by a will, an administrator must distribute the assets to the appropriate parties. Probate administration involves a court-supervised gathering the assets of the deceased, paying debts and taxes, and distributing the remainder to the inheritors.
Many people wrongly believe that the preparation of a living trust eliminates the need for a formal administration of a decedent’s estate. In fact, many of the same types of tasks must be performed with a living trust as with a probate proceeding. This could include notifying the beneficiaries of the trust, preparing an inventory and appraisal of the trust, payment of claims and administration expenses, handling tax matters, and managing trust assets.
Some people may elect to establish a trust and appoint a trustee when planning their estate. This can be a good option in order to keep the process of administration of assets more private and timely.
A trustee has a duty to conduct the affairs of the trust with the requisite care and loyalty expected of a fiduciary. The trustee must preserve and prudently manage trust assets, keep appropriate records, and manage or distribute the trust assets in accordance with the trust document. The trustee is also prohibited from self-dealing and commingling trust and personal assets. The trustee must act with impartiality and loyalty to the trust beneficiaries.
When a trustee violates these duties or prohibitions, the trustee can be held personally responsible for losses that his or her actions cause to the trust.