Living Trust – Managing and Closing Your Trust With Confidence

Trust administration is more than checking off tasks. It is the structured process of managing the trust’s assets, coordinating with beneficiaries, fulfilling fiduciary duties under Michigan law, handling required tax filings, and completing final distributions or trust termination when appropriate. Unlike probate, a properly drafted trust often operates outside the court system; however, the duties remain serious and legally binding.

Typical steps include:

• Confirming the trust’s validity and identifying the successor trustee
• Locating, valuing, and securing all trust assets
• Notifying beneficiaries of their rights and the trust’s existence
• Managing investments and preserving trust property
• Filing required federal and state tax returns for the trust
• Making distributions in accordance with the trust document
• Winding up and closing the trust when terms have been fulfilled

Because trustees may be held personally liable for missteps, having experienced legal guidance is crucial. Our attorneys help clarify your duties, ensure proper documentation, and keep the administration process on track.

Serving as a trustee under the Michigan Trust Code means you carry substantial responsibilities. Your legal obligations go beyond mere bookkeeping — you must act prudently, avoid conflicts of interest, treat beneficiaries impartially, preserve trust property and honor the trust terms. Mihelich & Kavanaugh, PLC Law Office

Here are some of the most important trustee duties:

• Asset management: Identify every asset owned by the trust, ensure they are titled correctly, and implement a strategy for preservation and growth.
• Beneficiary communication: Inform all qualified beneficiaries about the trust, their rights, and the administration timeline. Regular updates and transparent reporting help avoid disputes.
• Fiduciary investment decisions: Under Michigan’s “prudent investor” rule, you must invest assets with care, skill, and caution — balancing risk, return, and beneficiary interests.
• Tax and debt obligations: Determine what tax returns must be filed (income taxes, potentially estate taxes or trust taxes), pay valid debts, and keep detailed records of every transaction.
• Distribution and termination: Distribute trust assets to beneficiaries according to the terms of the document, and eventually close the trust when all obligations are satisfied.

Failing to meet these duties can lead to beneficiary challenges, personal liability, or court intervention. With our support, trustees gain structure, clarity and the documentation they need to protect themselves and the trust.

Even well-planned trusts can encounter unexpected complexities. At Mihelich & Kavanaugh, PLC, we frequently assist clients with issues such as:

• Missing or unclear trust documentation: When trust documents are hard to locate or outdated, establishing authority and following the grantor’s intent becomes harder.
• Complex asset types: Business interests, real estate portfolios, or illiquid investments require careful valuation, management and often expert input.
• Multiple trustees or successor changes: When more than one person serves as trustee or successor trustee steps in, coordination, clarity of roles and beneficiary expectations can become problematic.
• Beneficiary disputes: When beneficiaries disagree over distributions, asset value, or trustee decisions, litigation risks rise significantly.
• Tax issues: Trusts may face income tax obligations, estate tax exposure, or missteps in filing that cause penalties or added cost.
• Improper distributions or recordkeeping: Failing to keep accurate records or distributing assets prematurely can lead to liability or audit exposure.

We address these challenges by providing an experienced legal framework: reviewing the trust document, advising on valuation and tax issues, helping trustees document decisions, and resolving disputes before they escalate.

Eventually, a trust will reach the point of closure — either because all assets have been distributed, the conditions have been met, or the document dictates its termination. Properly closing a trust is just as important as the administration phase. Steps typically include:

• Confirming all debts, expenses and tax obligations are settled
• Finalizing distributions to beneficiaries in compliance with trust terms
• Preparing and filing any required final accounting with the court (if applicable) or providing the documentation to beneficiaries
• Documenting the release of the trustee and the closure of the trust
• Ensuring all assets are properly transferred and beneficiary interests acknowledged

Even if a trust does not require court supervision, accurate final documentation helps prevent future claims, audits or disputes. Our attorneys work alongside trustees to ensure the trust’s legacy is honored, records are complete, and distributions are implemented smoothly.

If you’re serving as a trustee, successor trustee or beneficiary and facing the intricate process of trust administration, the team at Mihelich & Kavanaugh, PLC stands ready to assist. We’ll review your trust document, advise you on your legal duties, identify the assets, manage distributions, assist with tax filings, and ensure every step is handled correctly and efficiently.

Call our office today or fill out our secure online form to schedule your consultation. Allow us to guide you through the trust administration process with the knowledge, structure, and care your family deserves.