What Are Trust Administration Services?
When a trust becomes irrevocable, often at the last Grantor’s (Settlor’s/Trustmaker’s) death, or when a successor trustee steps in during periods of a Grantor’s incapacity, someone must actually oversee the trust, i.e., gather assets, pay expenses, invest prudently, communicate with beneficiaries, and make distributions exactly as the trust instrument and Tennessee law require. That work is commonly referred to as “trust administration”, and “trust administration services” are the professional, operational, and fiduciary support provided to carry it out.
In Tennessee, the legal framework for most modern trust administration is found primarily in the Tennessee Uniform Trust Code, Tennessee Code Annotated, Title 35, Chapter 15. This article explains what trust administration services typically include in Tennessee and how those services align with core trustee duties under Tennessee law.
Informational Disclaimer
This article is provided for general informational purposes only and does not constitute legal advice. Trust administration is highly fact-specific and depends on the trust instrument and applicable law. Individuals serving as trustees or beneficiaries should consult a qualified Tennessee attorney regarding their specific circumstances.
What Trust Administration Means in Practice
At a high level, trust administration is the ongoing fiduciary management of trust property from the moment a trustee accepts the role until the trust terminates and the remaining assets are properly distributed.
Under Tennessee law, once a trustee accepts a trusteeship, the trustee must administer the trust until it terminates or a successor trustee takes over and assets are delivered as required, acting in good faith, in accordance with the trust’s terms and purposes, the beneficiaries’ interests, and consistent with Tennessee’s trust code.
Trust administration services help a trustee, whether an individual or a corporate trustee, perform these obligations. In some cases, the service provider acts as trustee. In others, the provider supports an individual trustee with accounting, tax, investment, and compliance functions.
The legal duties that drive the scope of trust administration services in Tennessee
While the trust document always controls first, Tennessee law supplies default rules for trustee duties and powers unless the trust modifies them. Key duties that commonly define the scope of trust administration services include:
Duty to administer the trust: a trustee must administer the trust in good faith, in accordance with its terms and purposes, and in the interests of the beneficiaries.
Duty of loyalty: a trustee must administer the trust solely in the interests of the beneficiaries, as defined by the trust instrument.
Duty of impartiality: when a trust has multiple beneficiaries, the trustee must act impartially, giving due regard to the beneficiaries’ respective interests when managing, investing, and distributing trust property.
Prudent Administration Standard
A trustee must administer the trust as a prudent person would, considering the purposes, terms, distribution requirements, and other circumstances of the trust, while exercising reasonable care, skill, and caution.
Recordkeeping and Segregation of Trust Assets.
A trustee must keep adequate records of trust administration and generally must keep trust property separate from the trustee’s own property.
Duty to Inform and Report
A trustee must keep qualified beneficiaries reasonably informed about the trust and its administration, and provide information necessary to protect their interests, subject to the trust’s terms and Tennessee’s statutory rules, including representation provisions. These statutory duties form the legal foundation for nearly all trust administration services offered in Tennessee.
What Trust Administration Services Typically Include in Tennessee
Trust administration services generally cover the practical execution of the trustee’s legal obligations. Common service categories include the following:
Trustee transition and initial setup: services often begin with confirming the acting trustee, documenting acceptance of the trusteeship, reviewing the trust instrument for key administrative provisions, establishing trust accounts, retitling assets as needed, and creating an administration and compliance calendar.
Asset identification, inventory, and valuation: trust administration typically includes identifying and marshaling trust assets, obtaining date-of-death values when relevant, maintaining ongoing valuations, and ensuring that all trust property is properly titled and controlled.
Expense management and tax coordination: administrative services usually include paying trust expenses, professional fees, and other obligations, coordinating fiduciary income tax compliance, gathering information for returns and beneficiary reporting, and determining whether certain costs should be allocated to a trust or to a probate estate.
Investment management and oversight: trust administration services frequently involve developing and implementing an investment strategy consistent with the trust’s purposes and distribution requirements, monitoring investments, managing liquidity for distributions and expenses, and documenting investment decisions to support compliance with the prudent administration standard.
Beneficiary communications and reporting: services often include identifying who is entitled to notices and reports under Tennessee law and the trust instrument, providing periodic accountings or statements, responding to reasonable beneficiary information requests, and managing communications to reduce conflict and misunderstanding.
Distributions to beneficiaries: trust administration includes making required distributions and evaluating discretionary distribution requests under the standards set forth in the trust, such as health, education, maintenance, and support. Proper documentation of distribution decisions is a critical risk management component.
Accounting, Dispute Management, and Court Involvement When Necessary
In more complex or contested situations, trust administration services may include preparing formal trust accountings, addressing beneficiary objections, negotiating releases, and, when appropriate, seeking court approval of accountings or trustee actions under Tennessee law.
Trust Termination and Final Distribution
When a trust terminates, administration services typically include confirming termination conditions, paying final expenses, making final distributions, delivering final reports, and ensuring that trust assets are properly transferred to beneficiaries or successor trustees.
Trust Administration vs. Probate in Tennessee
Trust administration is often confused with probate, but they are distinct processes. Probate is a court-supervised process for administering a decedent’s probate estate. Trust administration, by contrast, is generally conducted privately by the trustee under the trust instrument and the Tennessee Uniform Trust Code, without ongoing court supervision unless a dispute or specific petition arises. Although trust administration is typically less formal and more private than probate, trustees remain subject to enforceable fiduciary duties under Tennessee law.
Who Provides Trust Administration Services in Tennessee
Trust administration services in Tennessee are commonly provided by licensed attorneys, corporate trustees such as banks or trust companies, professional fiduciaries where appropriately structured, law firms advising trustees on legal compliance, accountants handling fiduciary tax and accounting matters, and investment advisers operating under delegated fiduciary arrangements. It is important to note that a service provider assisting a trustee does not become the trustee unless formally appointed under the trust instrument or applicable law. The trustee retains fiduciary responsibility unless authority is properly delegated.
Choosing a Trust Administration Provider in Tennessee
When evaluating trust administration services, Tennessee trustees and families commonly focus on fiduciary process discipline, including documentation and recordkeeping, the provider’s ability to communicate clearly with beneficiaries, education provided to beneficiaries to assist them in managing expectations and finances where appropriate, experience managing conflicts and impartiality issues, coordination of tax and accounting matters, and experience with trustee transitions, final accountings, and trust termination procedures.