Executor Duties Checklist: Managing the Trust Account

This is the ninth of a series on the duties of an executor. Think of it like a checklist, with everything an executor needs to take care of. To make this list as comprehensive as possible, we’ve divided the series into 12 parts.

To view the series in its entirety, follow this guide:

Part 1: Handling Immediate Matters
Part 2: Gathering Documents and Funeral Planning
Part 3: Notifying Accounts and Collecting Information
Part 4: Tying Up Loose Ends
Part 5: Taking Inventory
Part 6: Decisions Regarding the Estate
Part 7: Administrative Duties
Part 8: Applying for Benefits (For Spouses/Beneficiaries)
Part 9: Managing the Trust Account (If Applicable)
Part 10: Distributing Assets
Part 11: Filing Taxes
Part 12: Finalizing the Estate

As an executor, you are responsible for administering the estate and following the deceased’s wishes as outlined in their will.

In some cases, there will be a living trust in place of a will. In this case, you’re acting as the trustee. The role is similar to that of an executor, especially in that you will be charged with distributing assets from the trust to beneficiaries and ensuring funds within the trust are properly handled.

What is a living trust?

A living trust is created by an individual prior to death. It’s essentially a legal document, giving an individual the power to manage the deceased’s assets for them, to eventually be distributed to beneficiaries. The person who creates the trust prior to their death is known as the trust settlor.

Often, people who choose a trust will do so to avoid the legal process associated with probate. It’s also helpful for those they leave behind, because trusts and the assets within them can be accessed immediately.

If you are charged with managing a living trust, you are the trustee.

There are two types of trusts:

Revocable: In this case, the contents of the trust remain a part of the deceased’s estate - and is therefore subject to estate taxes. The trust settlor is free to make changes to the trust or undo it altogether.
Irrevocable: In this case, the trustee becomes the legal owner and there is no flexibility on the part of the trust settlor to make changes to named beneficiaries.

The contents of a trust

Often a will serves as more than just a document outlining assets and beneficiaries. It included special wishes and outlines desired funeral plans.

A trust can contain similar instructions. It will also contain details of how the trust was created - and who witnessed and notarized the document.

If you’re a trustee, here are some things to expect:

Details about the creation of the trust
Special instructions regarding funeral planning
Wishes around burial and cremation
List of beneficiaries and personal effects intended for them
Beneficiaries and how funds and assets should be distributed
Succession planning for the trust, should need arise

Managing a trust

If you are the trustee, managing the trust comes with its share of paperwork. You will need to locate all of the deceased’s assets and associated documents. Take special care to note how assets are titled and keep an eye out for any that may be jointly owned by a living person, which may alter how they can be distributed.

You will need to take inventory and assess the value of assets, like property, artwork and antiques. Some assets will need to be professionally appraised.

There can be a lot of nuances in how people decide to distribute their assets and funds between trusts and estates. Income taxes, debts, and professional fees (such as a lawyer or appraiser) should all be paid from the trust. And, as the trustee, you’re still responsible for ensuring the deceased’s debts are paid from the trust in good order. Additionally, you need to follow proper procedures and ensure any items passed outside of the trust are passed accordingly.

Distributing assets

This is one of the final steps in managing a trust. As the trustee, you need to ensure all expenses have been paid or enough funds have been set aside to cover expenses - before giving money away.

Beneficiaries should receive funds and assets according to the deceased’s wishes outlined in the trust. As the trustee, you’re responsible for this process and ensuring everything is accounted for. You can also be personally liable if you act outside of the bounds outlined in the trust, such as mixing your finances with the trust or withdrawing from the trust for personal gain.

Keeping records

As a trustee, you should be thinking like an accountant.

You need to collect financial statements, keep up-to-date records of all transactions and maintain a ledger. You can choose the method you wish for a ledger, but the most effective way is to leverage an accounting system or spreadsheet - rather than handwritten documents.

What if the trust is ongoing?

In some cases, there will be an ongoing trust for the care of dependent children, pets, spouses, or persons with disabilities. People also set up charitable giving trusts.

Depending on the trust, it may be designed to pay out a certain amount monthly or yearly to care for the beneficiaries. Funds from the trust may also be designed to pay out at a certain time for a certain purpose, such as, when a beneficiary goes to a post-secondary institution.

Next in the Executor Duties Checklist, distributing assets.