Trust Administration is the non-probate administration and distribution of the estate that was held in a trust. Trust Administration involves the following steps:

	Identify the assets of the Trust Estate
	Value assets of the Trust Estate
	Pay creditors of the decedent and the Trust Estate
	Identify the beneficiaries of the Trust Estate
	Distribute Trust Estate assets to the beneficiaries and/or establish new trusts to hold and administer distributions to beneficiaries

A trust is a legal agreement in which one or more persons holds legal title to property and manages it for the benefit of one or more persons. The duties of the Trustee involve the collection, management and investment of trust assets and the accumulation and distribution of income and principal pursuant to the terms of the trust. A trustee is obligated to follow the instructions of the trust (similar to the executor of the Will), and use care and diligence when performing his or her duties. A trustee can be held personally liable to the beneficiaries for any failure to comply with his/her duties as trustee of the trust.

	Notify the Beneficiaries. The trustee should notify the beneficiaries of the estate that the trustor has died and that there was a trust agreement having the person as a beneficiary.
	Inventory and Appraisal. The trustee must prepare an inventory of the trust assets and establish a fair market value of the assets as of the date of the decedent’s death. Securities and cash-type investments are easy to value, but for other types of investments it may be necessary to hire a professional appraiser. An appraisal may be necessary to (a) determine the amount, if any, of estate tax; (b) determine the cost basis of any trust assets that may later be sold; and (c) determine how to allocate the decedent’s assets among various trusts or beneficiaries entitled to a share of the estate.
	Record Keeping and Checking Account. The trustee, in addition to an asset inventory of the trust assets, should establish a bank account in the name of the trust and a record keeping system for all of the trust assets. The trustee is in charge of properly accounting for all trust receipts and disbursements.
	Payments of Expenses. Trustees may pay routine administration expenses out of the trust estate, including accountant and attorney fees, taxes and other expenses related to the maintenance of the trust property. There may be debts or liabilities incurred during the decedent’s lifetime which the trust property may require a creditor’s claim to request payment for the outstanding debts. This is similar to the manner in which creditor claims are handled in a probate proceeding.
	Taxes. Some tax matters may need to be dealt with at an early stage. Estate tax returns generally need to be filed within 9 months after the decedent’s death, if the decedent’s estate exceeds the federal estate tax exemption amount. The decedent’s income tax return must also be prepared and filed.
	Allocation of Trust Assets. Many times the trust assets must be allocated among various sub-trusts of the decedent’s living trust. The trust may also call for certain assets to be immediately disbursed to beneficiaries of the trust.
	Non-Trust Assets. If the decedent owned assets such as jointly held property or retirement plans, the title to these assets may need to be changed. It is also necessary to apply for any life insurance benefits owned by the decedent.

	Accounting to Beneficiaries. The trustee is generally required to prepare an annual accounting to the beneficiaries. The accounting will include information about the income, expenses, gains and losses of the trust assets. The accounting may also include schedules of any sales of the trust property, and liabilities of the trust, and distributions made from the trust assets.
	Trust Income Tax Return. In general, an irrevocable trust earning income in any taxable year must file a fiduciary income tax return for that year. The return is due on April 15 of the following year, similar to personal income tax returns.
	Beneficiary Disbursements. The trustee is required to make distributions of the income and/or principal to the beneficiaries of the trust in according to the terms of the trust agreement.
	Managing Trust Investments. The trustee is expected to manage the trust assets in a prudent manner, and to properly diversify the investments.
	Professional Consultants. A trustee may hire outside consultants (accountants, attorneys, money managers) as is necessary to assist in administering the trust estate. The fees for these types of consultants are generally paid out of the trust assets as administration expenses. The trustee is some cases may be able to receive a fee from the trust estate for his or her work as trustee in administering the trust.

In conclusion, being a trustee is a significant responsibility, and a trustee should not hesitate to find professional legal, accounting or investment assistance whenever a question arises.