Seven steps to ensure your living trust is administered properly

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Establishing a revocable living trust can offer several benefits, but only if the trust is administered properly.

  1. Make sure the trust is properly funded. This means the majority of your assets, other than retirement accounts, will either be transferred into trust ownership or have the trust named as a beneficiary or contingent beneficiary. Taking this first step will ensure no probate is required at your death and trust assets can be easily managed by your successor Trustee should you no longer be able to act as Trustee during your lifetime.
  2. You may have a duty to keep trust beneficiaries informed of the trust. The trust instrument will direct you regarding your notice responsibilities. If the trust gives no instructions, Oregon’s Uniform Trust Code, ORS 130, can guide you.
  3. You have a duty to prepare tax returns for the trust. Generally, the trust income will flow through the trust and be reported on your personal income tax returns. A certified public accountant can assist you with the required tax return(s) and provide you with form K-1 to assist you in reporting the trust income on your return(s).
  4. Be careful not to unintentionally defund your trust. If you take trust assets to purchase a new asset, account, etc., but do not take ownership of the new assets or account in the name of your trust, you will have unintentionally defunded your trust and potentially created a probate asset.
  5. You should discuss your trust and your wishes with the successor Trustee should she or he be called on to act as Trustee on your behalf. The successor Trustee needs to understand her or his role, Trustee duties, and the nature of the trust assets.
  6. Keep good records of the trust assets, tax returns, and estate planning documents. Your successor Trustee needs to know where this information is kept and have access to it should she or he need to act.
  7. You need to remember to update the terms of your trust and other estate planning documents as needed if you have any life changes such as marriage, divorce, death, or incapacity of a potential beneficiary.

An experienced estate planning attorney can explain the benefits of a revocable living trust and how to properly administer the document. Contact the Estate Planning attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.

If you would like to learn more about estate planning and trust administration, click here to receive our FREE Legal/Financial Planning Guide.