How to Organize a Trust’s File System
Staying organized is important when you’re a trustee in an estate. The grantor has relied on you to handle the trust’s assets. When you’re organized, you know where the trust instrument and other important documents and records are.
Getting started: Organizing the right way
The day you discover you’re an estate trustee is the day you should begin organizing the trust’s administration. Head to your local office supply or stationery store for the following items:
Paper supplies: Pick up manila files, file folders, labels, special accounting pads, legal pads, and anything else you think may be useful.
Various ink stamps and ink: If you’re going to be collecting dividend and/or interest checks, you may want to purchase a For Deposit Only stamp for the back of your checks, or a date stamp to put on all trust correspondence you receive.
A filing cabinet: You want one that locks and is fire resistant.
A computer, printer, and Internet connection: If the trust is large enough, complex enough, and will continue long enough to warrant the cost, these investments will be invaluable.
Most of the work you need to do for any trust can be done on a computer, and having one can save you a great deal of time and money over the course of the trust’s administration.
Create some file folders. Here are some you definitely want to have, whether you have a manual or electronic filing system. Keep in mind that some of these files can be destroyed at a later date. Others you may want to keep forever. The following list shows you which files you want to keep permanently:
You can destroy the following files after you’re done with them. In many cases, however, you’re not going to want to get rid of these files for many years:
Bank statements and cancelled checks, filed by date: You can destroy them after you’ve prepared the annual accounts and after beneficiaries have assented to those accounts. If this is a probate trust, hang onto them until the probate account has been allowed.
Brokerage statements and stock trade confirmations, filed by date: Hang onto them as long as you keep the bank statements and cancelled checks.
Income tax returns, either filed sequentially by date in one folder or in separate folders for each year’s returns: Keep copies of all income tax returns for at least seven years after you file them.
Correspondence, filed by date: Depending on the content of the letters, you may want to hold onto old correspondence until the trust terminates and all accounts have been assented to. You can place the really old correspondence into storage, though.
E-mails, plus memos and notes regarding phone conversations and meetings, filed by date: Hold onto them as long as you keep your correspondence files.
Billing: As trustee you bill the trust for your fees. You want to keep a record of what you bill and what you base your fee on. You can destroy them together with the bank and brokerage statements.
Miscellaneous: This file is where you put anything you think is important but doesn’t fit into any of the other categories. If you’re placing old correspondence, e-mails, and memos into storage, you probably should put old miscellaneous files there as well. After the trust terminates, you can destroy them.
If your miscellaneous file is very large, see whether you can group that information into some additional file categories and shrink it to a manageable size. The more you narrow the information you’re keeping, the more easily you can find what you’re looking for. If you’re administering multiple trusts, or if you want to make your file folders more portable, file them in an expandable manila file and then in the locking filing cabinet.
Keeping the trust instrument handy
You may have already read the trust instrument and be fairly certain you know what’s contained in it, but you can’t read, and comprehend, everything in it sequentially.
Because a trust instrument can be confusing, you want to be able to refer to it whenever possible to clarify any questions you may have. You want to keep a copy of it close by so you can easily access it. You may want to scan a copy into your computer. Or you may prefer to maintain a hard copy in a three-ring binder or a manila folder. Wherever you keep it, make sure it’s fastened. If you use a binder, make sure to reinforce the punched holes. Make sure the instrument is always fully legible. As pages begin to fade, recopy and replace them as necessary.