Merrimack Estate Planning Clients Have Questions About Trust Administration.

Revocable-Trusts-Welts-White-Fontaine-226x150Some of our estate planning clients are trustees over trusts created by firm clients, or are asked to serve as a trustee or successor trustee over a trust drafted by other attorneys for a parent, sibling, or other relative. What a trustee must do to administer a trust is a common question. Here are some of the basics.

What a trustee must do to administer a trust?

The trustee must administer a trust in accordance with its terms and applicable law. The first step is to identify the property which is either owned by the trust or payable to the trust. The trustee must then identify the beneficiaries of the trust and their rights in the trust property.

Property transferred to the trust is called principal. Income refers to the amount earned from time to time, such as interest and dividends, which is taxable as ordinary income. When a trust owns residential property, the income beneficiary may be entitled to use the property, in lieu of rental income. Capital gains and losses are generally allocated to principal, unless a trust provides otherwise. Net income refers to income, after payment of expenses, including trustee fees and similar expenses.

In New Hampshire, the New Hampshire Trust Code provides for the administration of trusts to the extent that a trust does not provide otherwise. Most trusts will also reference the applicable laws, as well as specific rules for the particular trust.
As a general rule, a trustee must invest the trust assets as a reasonably prudent person would invest his or her own funds. This is called the prudent investor rule. Unless a trustee has the sufficient skills to manage a trust, our firm recommends that trustees consult with an investment advisor to assure compliance with this rule.

For our next estate planning blog we will discuss a trust holding stock in a closely held business and some of the nuances associated with different types of trusts.

If you’re interested in talking with the attorneys at Welts, White & Fontaine PC about estate planning, including wills and trusts, business buy sell agreements, and adult guardianships please contact us by clicking here or by calling (603) 883-0797. Welts, White & Fontaine is one of Nashua’s largest, multi-practice law firms and serves the legal needs of both individuals and businesses in towns such as Amherst, Milford, Hudson, Brookline, Windham, Hollis, Merrimack, Litchfield, Bedford, Londonderry, Pelham, and, of course, Nashua.

Author: John Polgrean

This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.