There are certain situations where a trust is an appropriate and helpful estate planning tool.  But, while this is true, establishing a trust is typically only a first step in the process.  Trusts can help people avoid probate, provide asset management, and protect beneficiaries, but trust administration itself requires oversight and has its own potential expenses.  To help with trust administration, trustees should consider advice from The Miller Law Firm, P.A.

A common and dangerous misconception is that establishing a trust now makes unnecessary any oversight later.  While trust assets can transfer to beneficiaries without the need for probate, the trust itself still requires administration.  Trusts serve a valuable purpose. Trust administration can be a simpler process than complex probate matters.  But, South Carolina trustees have to pay attention to detail and fulfill their fiduciary duties while undertaking this process.

Fiduciary duties for South Carolina trustees include preserving trust funds, complying with trust and tax laws, and transferring trust income and/or assets to trust beneficiaries in accordance with the trust directions.  Trust administration can be complex, and The Firm can help trustees meet their duties.  The following steps are necessary in a trust administration:

  1. The first step a trustee should take is to take inventory of trust assets and obtain appraisals of trust property where necessary.  Getting an accurate inventory of trust assets can take some investigating and can take time. Trustees must get an accurate appraisal of assets because a decedent’s net worth determines if there is a federal estate tax liability.  Trustees should then create a trust inventory to document their findings. The inventory should be shared with the trust beneficiaries.
  2. Trustees are under a duty to pay estate and trust income taxes, when required.  Trustees must be aware that oftentimes trusts contain provisions specifically intended to help reduce taxes. Trustees who do not comply with federal and/or state law and regulations can increase the trust’s and/or estate’s tax obligations considerably. The Firm’s attorneys, who are familiar with tax law, can help trustees prepare and manage the trust to receive the most advantageous tax treatment.
  3. South Carolina trust law allows everybody who may benefit from a trust to request copies of the trust document.  In certain circumstances, South Carolina trustees are required to provide trust beneficiaries with notice of the trust.  Also, if a Trustee has a Will in his/her possession, it must be filed with the Probate Court located in the Decedent’s county of residence within thirty days of the date of death.
  4. South Carolina trust law requires trustees to fulfill certain trustee duties.  Trustees disregard their duties at great peril. A trustee who ignores trustee duties may be required to repay the trust for losses in value, and can be removed as trustee.  Trustee duties include:
  • Following the trust’s terms and instructions.
  • Comply with South Carolina trust laws.
  • Act in the beneficiaries’ best interests at all times.
  • Don’t use trust assets for personal gain, nor commingle personal property with trust assets.
  • Invest prudently with well diversified investments.
  • Maintain detailed records which will enable the trustee to render accurate accountings to beneficiaries.
  1. Trustees must exercise certain powers in order to fulfil their duties as trustee.  Generally, trustees have power to carry out the trust terms, unless a term conflicts with South Carolina law.  Trustees have a broad array of powers to utilize, including:
  • Receive additional assets.
  • Review and direct investment strategies.
  • Buy, sell, and lease assets.
  • Purchase insurance.
  • Make reasonable repairs to and maintain trust property.
  • Distribute payments to trust beneficiaries.

Trusts and the administration of them can be a complex matter. We can help you with the setup and long term administration of your trusts to protect you, your family and your assets. Call the Miller Law Firm, P.A. today at (864) 527-0413.