Why Legal Representation Is Critical When Administering a Trust

By Tyler P Krueger, Attorney at Law, The Law Firm of Foster Krueger

If you've been named as a trustee of a trust, you might feel honored that someone has entrusted you with this responsibility. At the same time, you might also feel a bit overwhelmed with everything that is happening. Administering a trust isn’t simply a matter of following your loved ones’ wishes. The process involves complex legal, fiduciary, and financial responsibilities. While many people assume this process is simple and they can handle it on their own, failing to consult an experienced attorney can lead to costly mistakes that could otherwise be avoided.

Three reasons why it is important to retain a competent trust attorney to represent you throughout the trust administration process:

1. Legal Notices and Information Gathering

Being a trustee means you have a legal duty to act in the best interests of the trust beneficiaries and to carry out the terms of the trust. Rarely do trust documents contain step-by-step instructions on how to comply with the complicated laws of California. Indeed, the trust states who will receive the property in the end, but it contains little to no instructions on the mechanics to achieve this goal.

An attorney can guide you through the often complex steps of a trust administration, such as sending notices to beneficiaries and government agencies, collecting and inventorying trust assets, and paying debts, taxes, and expenses. An attorney can also help you manage and protect trust assets and, when the time comes, distribute those assets according to the instructions in the trust

Without legal advice, you may overlook key requirements required by the probate code that can result in significant consequences to you or the trust beneficiaries. A trust attorney ensures compliance with the law and helps guide you through each step of the administration. Otherwise, you may find yourself in the middle of a dispute or litigation.

2. Liability for Administering the Trust Incorrectly

Many trustees don’t realize that they can be held liable if something goes wrong. Beneficiaries have certain rights, and if a trustee makes a mistake, whether intentional or unintentional, they can be liable and subject to lawsuits by beneficiaries or creditors.

These mistakes and missteps can open the door to lawsuits, surcharge actions, or petitions to remove you from your trustee role. Even if your intentions are good or you made an honest mistake, the court can find that you violated your fiduciary duties. A trust attorney serves as both a guide and a shield, helping you act prudently to protect you from liability.

3. Getting a Trust Administration Attorney Saves Money in the Long Run

It may seem counterintuitive, but hiring an attorney often saves money—sometimes significantly. Generally, legal fees for administering a trust are paid from the trust itself, not out of your own pocket. More importantly, an experienced trust attorney can help you prevent costly errors, avoid tax penalties, resolve beneficiary disputes early, streamline the administration process, and assist you in administering the trust efficiently, thereby reducing unnecessary delays

For example, if you distribute assets before paying creditors or taxes, you could face personal liability or have to pursue beneficiaries to “claw back” funds (often an impossible task). A small upfront investment in legal help can prevent these financial headaches and add a layer of protection.

We're Here to Help Trust Administrators

Administering a trust is a legal process, not just a personal favor. This is not a process you have to do alone. Retaining legal representation ensures that you fulfill your duties correctly, minimize your risk of liability, and protect yourself and the trust’s assets.

Whether you're serving as a trustee for a friend, family member, or client, the smartest move you can make is to consult a trust attorney early in the process. The attorneys at Foster & Krueger have extensive experience in representing individual and professional trustees through a variety of complicated trust administrations.