Trust Administration

Understanding Trust Administration in Oregon

When a loved one passes away with a trust in place, the responsibility for managing and distributing the trust’s assets falls to the Successor Trustee. This process is known as trust administration. While it often avoids probate and can be more efficient than administering a will, trust administration still involves important legal duties, timelines, and potential risks for the trustee.

At Merkel & Conner, we guide trustees through every step of trust administration to ensure they meet their legal obligations while carrying out the wishes of the person who created the trust (the “Settlor”).

What Is a Trust and Why Does It Matter?

A revocable living trust is a common estate planning tool that allows someone to transfer assets into a trust during their lifetime. Upon their death or incapacity, the trust becomes irrevocable, and the Successor Trustee takes over management. Trusts help:

• Avoid probate

• Maintain privacy

• Streamline administration

• Provide long-term management for beneficiaries

• Protect special needs or vulnerable individuals

Responsibilities of a Trustee in Oregon

If you’ve been named as a trustee, you have a fiduciary duty to act in the best interest of the trust and its beneficiaries. Oregon law imposes strict standards, and failure to comply can result in personal liability. Key responsibilities include:

1. Reviewing the Trust Document
   Carefully read and understand the terms of the trust. This will guide your duties, distribution plan, and any ongoing responsibilities.

2. Notifying Beneficiaries and Heirs
   Oregon law requires that beneficiaries and certain heirs receive notice of the trust’s existence and the trustee’s role. This also begins the statute of limitations for any challenges to the trust.

3. Inventory and Valuation of Assets
   The trustee must identify, collect, and value all trust assets, including bank accounts, real estate, investments, and personal property. Assets may need to be appraised or retitled into the name of the trust if not already done.

4. Obtaining a Tax ID Number (EIN)
   After the Settlor’s death, the trust needs its own tax ID number to open accounts and report income.

5. Managing and Protecting Assets
   Trustees must prudently manage trust property, which may include maintaining real estate, overseeing investments, or safeguarding valuables. This includes avoiding conflicts of interest and keeping detailed records.

6. Paying Debts and Expenses
   Trustees are responsible for paying any legitimate debts, final expenses, taxes, and administrative costs before making distributions.

7. Filing Taxes
   You may be required to file:

   • The decedent’s final income tax return

   • Estate income tax returns (Form 1041)

   • Oregon or federal estate tax returns (if the estate exceeds applicable thresholds)

8. Distributing Trust Assets
   Once debts and taxes are settled, the trustee distributes the remaining assets to the beneficiaries according to the terms of the trust. Some distributions may be outright; others may be held in continuing trusts.

9. Providing an Accounting
   Oregon law often requires the trustee to provide an accounting to beneficiaries showing how trust assets were managed and distributed.

10. Closing the Trust
    After distributions are complete and any ongoing trust provisions are in place, the trust can be formally closed.

How Long Does Trust Administration Take?

The timeline depends on the complexity of the trust, the number of assets and beneficiaries, and whether any issues arise. Simple trusts may be administered in 3–6 months, while more complex cases—such as those involving tax returns, real estate sales, or ongoing sub-trusts—may take 12 months or longer.

Common Issues That Arise

• Conflicts between beneficiaries

• Poor recordkeeping or mismanagement of funds

• Failure to address taxes or debts

• Confusion about legal duties or distribution terms

Working with an experienced attorney can help avoid these problems and reduce the risk of legal exposure.

How We Can Help

At Merkel & Conner, we provide comprehensive guidance to trustees, whether you're administering a straightforward trust or navigating more complex arrangements involving blended families, special needs planning, or tax considerations. We help you understand your responsibilities, meet your legal obligations, and carry out your loved one’s wishes with confidence.

Whether you’ve just been named a trustee or are already in the middle of the process and feeling overwhelmed—we’re here to help.

Contact us today to schedule a consultation and ensure your trust administration is handled properly, efficiently, and with care.