Trusts are powerful tools in estate planning. When you create a trust, you have a plan in place to protect and distribute assets after you have passed. However, when it comes to managing a trust in Wisconsin, you might have heard of two terms: trustee and trust administrator.
While closely related, these terms refer to different aspects of trust management. So, what is the difference between a trust administrator and a trustee? Let’s break down their responsibilities and see how they work together to manage the trust.
What Is a Trustee?
A trustee is an individual or entity appointed in the trust document to manage the trust’s assets. They need to carry out the terms of the trust as specified by the grantor. Along with that, the trustee must act in the best interests of the beneficiaries. These individuals can include family members, close friends, and legal or financial professionals. In some cases, they can be institutions like banks or trust companies.
Since a trustee has a fiduciary role, they have a legal obligation to act with loyalty. As a result, they must prioritize the beneficiaries’ interests above their own.
The trustee is responsible for protecting and managing the trust’s assets. These duties may involve:
- Investing funds
- Maintaining real estate
- Overseeing other property held within the trust
After the grantor has passed, then the trustee will make sure that all distributions to beneficiaries are aligned with the terms of the trust. For example, the trust might specify that a beneficiary receives funds at certain ages or for specific purposes, such as education or healthcare.
When performing their duties, these individuals also need to adhere to the provisions of the Wisconsin Trust Code. They will need to ensure there is proper documentation, reporting, and management of the trust.
Finally, trustees are responsible for filing the trust’s tax returns. If there are any owed taxes, then they must be paid from the trust’s assets.
Any mismanagement of these duties can lead to legal and financial consequences.
What Is a Trust Administrator?
While the trustee is the person or entity responsible for carrying out the trust’s terms, the trust administrator takes on the larger role of managing and executing the trust itself. With that, they will make sure the trust operates effectively, from the initial setup to the final distribution of assets.
First, the trust administrator will review the trust document to understand the grantor’s intentions and the trustee’s responsibilities. After that, they will identify, locate, and determine the value of all trust assets. These assets might include bank accounts, real estate, investments, or personal property.
In many cases, Wisconsin law requires that beneficiaries and creditors be informed about the trust. That provides an opportunity for creditors to make claims if necessary.
Additionally, trust administrators must communicate with beneficiaries. This includes giving updates on the trust’s status, distributions, and financial performance.
When the trust’s purpose has been achieved, the trust administrator begins the final steps of the role. Once all obligations are met, the trust can be formally closed.
Do the Duties of the Trustee and Trust Administrator Overlap?
Yes, the duties of a trustee and a trust administrator often overlap. In many cases, the trustee and trust administrator perform similar or identical tasks. This overlap is because the trustee is often directly responsible for the administration process, especially in smaller trusts.
Despite the overlap, the roles do differ. Trustees have wider oversight responsibilities, including interpreting the trust’s terms and making discretionary decisions about distributions or investments.
On the other hand, trust administrators focus on executing specific tasks, such as managing paperwork, communicating with beneficiaries, or coordinating with attorneys and financial advisors.
Keep in mind that trustees are personally liable for their actions as fiduciaries. If they mismanage the trust, they can be held legally and financially responsible. However, trust administrators are usually not liable for the trust’s overall management unless they commit acts of negligence or fraud.
Learn How to Find the Right Trustee or Administrator for Your Trust
Now that you know the difference between a trust administrator and a trustee, you want to ensure the trust operates as intended and serves the best interests of everyone involved. At Collins Law Firm, we offer estate planning, administration, business, and elder law services.
Our experienced estate planning team helps individuals like you to build and protect your legacy. Schedule your free and confidential consultation today by contacting us or calling (414) 207-6292.