Can I Administer a Trust On My Own?
If you’ve been named as a Successor Trustee, we send you our congratulations and condolences.
We congratulate you because the trust creator (called the Settlor) has a great deal of trust in you to carry out their wishes when they can no longer act as trustee, either due to incapacity or death. That says a lot about your character and abilities.
We send condolences because serving in the role of successor trustee can be time-consuming, challenging, and, more often than not, a thankless job. It’s a challenging journey, but we’re here to help and support you.
One common question you may be wondering is: When the time comes, can I administer the trust on my own? Do I really need to hire an attorney to coach me through the trust administration process?
The short answer is: yes, you are legally allowed to administer a trust without an attorney. But that doesn’t mean it’s a good idea.
Why Administer a Trust On Your Own?
The number one reason why some people want to administer a trust on their own is to save the estate money. A typical trust administration may cost $5,000-10,000 or more, depending on the complexity of the work involved. Some successor trustees may want to save that money, especially if they’re also beneficiaries, and feel it would take away from their beneficial share. But as we will explain below, this is one area in which you do not want to skimp.
There are other reasons people consider “do-it-yourself” trust administration. Maybe the estate has dwindled in size and few assets remain so the administration seems simple. Maybe you’ve been involved in other estate administrations and feel that you know what you’re doing.
Occasionally, it may work out fine for an experienced successor trustee to administer a very small and simple estate on their own. But this is the exception rather than the rule. Our firm frequently represents trustees who tried to administer a trust on their own or with an inexperienced attorney, made some mistakes, and are now being sued by one or more of the trust beneficiaries.
Avoiding litigation is just one of our top 4 reasons we recommend hiring an experienced trust law firm before you administer a trust.
4 Reasons To Hire an Attorney
#1 They Reduce Your Personal Liability.
Did you know that if you administer a trust on your own and make a mistake, even an honest one, that you can be held personally liable to the beneficiaries for damages? Hiring an attorney helps you minimize that personal liability. When you hire an attorney to supervise the trust administration, they have a duty to ensure that you properly observe all of the rules under the Probate Code.
#2 They Provide a Third Party for Communication.
Being a successor trustee can put you in an uncomfortable position with beneficiaries, especially if they are aggressive or hostile. They may have plenty of questions about when they’ll be receiving their inheritance, how much they get, etc. If you hire an attorney, you now have a third party to whom you can direct these questions. If beneficiaries become hostile and aggressive, you can opt to communicate with them only through your attorney.
#3 They Help You Observe Your Duties.
Everything you do as a Trustee is governed by the California Probate Code. Did you know that the Probate Code has around 21,000 statutes? That’s a lot of rules and responsibilities to learn and observe. An experienced trust attorney has probably read the entire Probate Code and should consult it regularly. With this knowledge base, they can offer you critical guidance to ensure you don’t violate your duties.
In addition to knowledge, experience makes a huge difference when it comes to trust administration efficiency. Most successor trustees are administering a trust for the first time. Compare that with an experienced trust attorney, who often administers dozens of trusts every year. Chances are, if you have a problem, they’ve seen it before and know how to resolve it. Having a coach to guide you through the process is invaluable and saves the estate time and money.
#4 They Help You Avoid Litigation.
Our estate litigation team has witnessed countless examples of successor trustees who tried to administer a trust without an experienced trust attorney and ended up getting sued. Here are 3 real-life examples:
- Trustees who “borrowed” trust funds to purchase luxury items like a sailing boat or a designer coat and got sued by the beneficiaries.
- The trustee who fumbled around for 5 years, first trying to administer a trust alone and then with the help of a general (non-trust) attorney. Neither of them knew what they were doing and the Trustee eventually got sued by beneficiaries who were tired of waiting to receive their inheritance.
- The Trustee who co-mingled her personal assets with trust funds (which violates her duties under the Probate Code) and got sued by the beneficiaries.
When you administer a trust on your own, you risk making a major mistake or taking so long to figure everything out that the beneficiaries lose their patience and hire their own legal counsel. Trust litigation can cost tens of thousands of dollars! If you truly want to save the estate time and money, we recommend finding the best trust law firm possible to oversee the administration process.
If you or someone you know would like a no-cost consultation to discuss trust administration, feel free to contact our office.
Daniel Hunt is lead attorney and owner at Law Offices of Daniel Hunt. He is also a California State Bar Certified Legal Specialist in Estate Planning, Trusts & Probate Law.