Trust & Estate Administration

What is the difference between an Estate and a Trust?

An estate is settled in accordance with the provisions of the Will or intestacy laws of the state of residency. It is generally a short term administration - one to two years.

A trust is managed in accordance with the provisions of the Trust which must be written during the grantor's life (inter vivos) as a trust or as a trust in the grantor's Will. It is generally a longer term administration - for a period of years or a certain person's life.

What is Estate Administration?

Estate administration is the process of collecting and safekeeping assets, paying all debts and expenses of the Estate including Federal Estate Tax and State inheritance/estate tax, preparing tax forms (Form 706, Form 1041, Form 1040), defending the provisions of the Will against any litigation (if the decedent died testate), preparing any necessary court reporting (probate), and distributing the assets to the beneficiaries.

An Executor(trix) may be named in a decedent’s Will to administer and distribute the estate’s property.  If the decedent did not leave a written Will, state law specifies who can apply to and be appointed by the Court as an Administrator(trix) to administer and distribute your property.

    New Hampshire Probate & Estate Resources

Estate Taxes

Depending upon the value of the estate, the Administrator may be required to file Federal or state gift/estate taxes.  The Administrator may also need to file an income tax return on behalf of the estate (Form 1041), if the estate earns any income (such as rental payments or earned interest).  Lastly, if necessary, the Administrator will need to file the decedent’s personal income tax return, if necessary. 

It is crucial to determine what assets are included in the decedent’s taxable estate, accurately assess their value, and fully understand the credits and deductions available to the estate.  Ensuring that the estate’s taxes are not under or overpaid assures the beneficiaries that they are receiving the full amount they deserve, and protects the estate from possible penalties and complications.  

Inventory and Accounting

During the Probate process the Administrator is required to prepare an inventory of the estate.  This inventory must include all of the assets passing through the estate, and valuations for the assets.  When the estate is ready to make distribution to the beneficiaries, the Administrator will need to prepare an accounting of the estate’s assets.  The accounting details for the interested parties, or the Court, where all of the property passing through the estate has gone.  The accounting reflects that the inventory assets were paid out to the beneficiaries, and all payments made for debts and taxes owed. 

Distribution to Heirs & Beneficiaries

The Administrator can make distributions to the heirs or beneficiaries, only after the estate’s debts and taxes have been paid.  The Executor is obligated to make distributions to the beneficiaries, in accordance with the Will, or to the lawful heirs, if the estate is intestate.  Unless the estate is closed via summary administration, the Executor/Administrator will need to prepare and file a detailed accounting for the Court, for review and approval.  If the estate is eligible for summary administration, the estate can be closed with the court, and no final accounting will need to be filed with the court.

What is Trust administration?

Trust administration is the process of collecting and safekeeping assets, investing principal appropriately, paying expenses of trust administration, preparing tax forms (Form 1041), defending the provisions of the Trust against any litigation, preparing any necessary court reporting (probate), distributing income to the income beneficiaries and at Trust termination, distributing principal assets to the remaindermen.  The Trustee(s) of the Trust are responsible for the administration of the Trust's assets, with a legal duty owed to the beneficiaries of the Trust.  The Trustee(s) may be required to provide annual accounting's to the beneficiaries, or to pay taxes on income of the Trust.

Trust Taxes

Depending on the assets held by the Trust and the terms of the Trust, the Trustee may be required to file an income tax return on behalf of the Trust.  Additionally, if the decedent's estate is required to pay taxes, but the estate does not have enough assets to pay the taxes, the Trustee may be responsible for reimbursing the estate. 

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