Arizona Trust Administration
When a trustee undertakes the responsibility for managing and distributing a trust following the death or incapacity of the person who created the trust, complex Arizona statutory provisions apply to administering the trust. At the Law Office of Luke Reynoso, P.L.L.C., we assist trustees with all aspects of trust administration in Arizona.
Arizona trust administration attorney Luke Reynoso provides legal services to clients from our primary office in Scottsdale, as well as from satellite offices in Gilbert, Phoenix, North Phoenix, and Peoria. We serve clients throughout Metro Phoenix and Maricopa County.
Laws Governing Arizona Trust Administration
In many respects, administering a trust is similar to administering an estate, except that trusts do not go through a public process like probate. While trust administration generally costs less and takes less time than estate administration, there are specific steps that the trustee must follow to meet legal requirements.
Even though trust administration occurs privately, complex legal rules in Arizona statutes govern the trustee’s duties and conduct as well as the administration process. The trustee acts in a fiduciary capacity in managing and distributing the trust. The laws hold the trustee to extremely high standards.
Fiduciary Duties of the Trustee
The high level of legal responsibilities placed on a trustee by law is one of the most important reasons that a trustee should seek assistance from an experienced trust administration attorney. If a trustee attempts to administer a trust without help from legal counsel, the risk of legal liability is substantial.
When the trustee accepts responsibility for administering the trust, the trustee has the duty to administer the trust in good faith and in the interests of the beneficiaries, as well as in accordance with the law. The trust document defines the interests of the beneficiaries that the trust serves.
The Arizona Trust Code imposes specific duties on the trustee, including:
- Duty of loyalty: The trustee must avoid conflicts between the trustee’s personal interests (or interests of a third party) and the interests of the beneficiaries.
- Duty of impartiality: If there is more than one beneficiary, the trustee must act impartially with regard to all aspects of the trust, including investing, managing, and distributing the property.
- Duty of prudent administration: The statute requires the trustee to administer the trust as a prudent person would, exercising reasonable care, skill, and caution.
- Duty to control and protect the trust: The trustee’s duties include taking reasonable steps to obtain control of the trust property and protect it.
- Duty to account: The trustee must maintain detailed records and account to the beneficiaries regarding management of the trust assets.
Individual sections in the Trust Code address detailed aspects of these duties. The law includes provisions relating to liability of a trustee for breach of duty, as well as removal of a trustee.
The fiduciary responsibilities of the trustee are not the only legal requirements that apply to trust administration. The law also requires the trustee to take specific steps in administering the trust.
Arizona Trust Administration Process
The Arizona Trust Code sets out a specific process for administering a trust. After the trustee accepts responsibility for trust administration, the process takes place in an orderly manner.
Review the Trust Document With an Arizona Trust Administration Lawyer
The trust document defines the purpose of the trust and interests of the beneficiaries. It also specifies the duties of the trustee.
Reviewing the trust document with an experienced trust administration attorney is an important step. If necessary, the lawyer assists the trustee in securing a Certificate of Trust that authorizes the trustee to act, so the trustee can begin the trust administration process.
Collect and Inventory the Trust Assets
The trustee’s first step in administration involves collecting and preserving the trust property and creating an inventory. As part of the process, the trustee establishes a record keeping system that meets legal requirements.
This process also includes establishing the value of the trust assets. In some cases, an appraisal is necessary.
Managing the Property
Throughout the process, the trustee manages the trust assets in accordance with the terms of the trust and the law. Depending on the circumstances, this responsibility may include selling property or investing the assets.
Notify the Beneficiaries and Authorities
Specific legal requirements apply to notifying beneficiaries of their rights in a trust. The trustee also may need to file documents relating to the trust with court or governmental authorities.
Paying Taxes and Filing Returns
At this stage, the trustee evaluates the trust in light of applicable tax laws. This process includes filing tax returns and forms and paying taxes, if necessary. The trustee also settles any outstanding accounts in the trust.
In some situations involving marital trusts, the trustee also files special tax forms. Division of the assets into sub-trusts also may be necessary.
Distributing Assets to Beneficiaries
The final step in the process involves distributing the trust property to the beneficiaries as provided in the trust document. To accomplish the transfer, it may be necessary to retitle some assets.
In some cases, the trustee’s responsibilities extend over a period of time. Administration of the trust must comply with legal requirements until the beneficiaries receive all the trust property.
Talk With an Experienced Scottsdale Trust Administration Attorney
A trustee’s responsibilities under Arizona law are extensive. If you agree to serve as a trustee, Attorney Luke Reynoso has the experience and skill to guide you through the entire trust administration process.
At the Law Office of Luke Reynoso, we also assist trustees with administration of living trusts during the trustee’s lifetime. If you require assistance with administration of a trust or have questions about trust administration, we are here to help.
From our primary office in Scottsdale office and our satellite offices in Gilbert, Phoenix, North Phoenix, and Peoria, we serve clients throughout Metro Phoenix and Maricopa County. Call us at (480) 306-6738, email us at firstname.lastname@example.org, or use our online contact form to set up your initial consultation.