New Jersey Trust Administration Made Simple
Aug 8, 2023 | Written by: | Share
If you are designated to serve as the Trustee of a Trust established either in a Will or in a Trust Agreement, the first step is to accept the Trusteeship. Once the Office of Trustee is accepted, you then have a fiduciary duty to use your best efforts to properly administer the Trust for the benefit of the Trust beneficiary in accordance with the instructions set forth in the governing instrument (either the trust provisions contained in the Will, or in the Trust Agreement).
The primary duty of the Trustee is to gather all the trust assets and title them safely in the name of the Trust. An initial inventory of all the trust assets should be prepared so that an accounting can detail how the trust assets have been administered.
If the Trust is created under the terms of a Will that has been accepted into probate by the Surrogate’s Office, then you will need to apply for the issuance of Letters of Trusteeship by the County Surrogate. This is a relatively simple procedure that can be completed in prompt fashion.
Once the trust assets are identified, the Trustee needs to retitle the assets in the name of the Trust. A Trust Agreement is essentially a set of instructions for the Trustee to follow to fulfill the purpose for which the Trust has been created. The Trustee must follow New Jersey law in administering the Trust, and exercise his or her discretion as provided in the Trust instrument for the benefit of the beneficiaries of the Trust. For example, if the term of the Trust is to last until a grandchild reaches age 25, and if the grandchild were to request a distribution from the Trust to pay for education expenses, then the Trustee will need to determine if that is an appropriate distribution of Trust assets. The Trustee might, for example, exercise discretion in recommending to the beneficiary that he or she first apply for financial aid from the institution in order to maximize the value of the Trust assets. Another example of the exercise of Trustee discretion might be where a grandchild requests a distribution to purchase a motor vehicle. Depending on various pertinent facts and circumstances, the Trustee might exercise discretion to authorize the distribution of a portion of the funds necessary to purchase the vehicle, with the suggestion that the beneficiary furnish the balance of the necessary funds. If the Trust has sufficient assets, the Trustee could exercise discretion to simply have the Trust pay for the entire cost of the vehicle.
The exercise of discretion in compliance with honoring the fiduciary duty of the Trustee as required under New Jersey law is usually relatively simple. However, there are times when the exercise of discretion requires legal advice to make sure that the proper steps are being taken by the Trustee in the context of the administration of the Trust.
Here at Gebhardt & Kiefer, we provide legal advice and recommendations to Trustees who are managing a wide variety of trusts ranging from the simple to the complex. If you find yourself in a situation where you are serving as Trustee and you have questions regarding the proper steps to be taken to administer the Trust, or to terminate the Trust when its purpose has been fulfilled, please contact us for a free consultation to make sure that the steps that have been taken by you as Trustee have been made in accordance with the terms of the governing Trust instrument and New Jersey law.
John G. Manfreda, Esq, is a partner with Gebhardt & Kiefer, P.C. His primary practice areas involve estate and business planning; estate and trust administration; corporate, commercial and real estate law, including asset protection planning; business succession planning and related transactional work; and the purchase and sale of businesses. He also has considerable experience in the area of probate litigation, including will contests and the defense of individual and corporate fiduciaries. Contact Mr. Manfreda at 908-735-5161 or via email.
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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.