What are the Primary Duties of A Trustee?

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Family member as trustee

I’ve Been Named as a Trustee – What are the Duties of a Trustee?

If you have been named as a Trustee, someone else has decided that you are the person they most trust to manage the financial affairs of their Trust. What is a Trustee and what are your duties and responsibilities? The simple answer is that you are responsible for complying with the terms of the Trust. The problem is the Trust does not go through all of your duties of a Trustee. Most of the time, the Trust will provide how the Trust is to be distributed, but there are several actions you must take before you even begin to distribute assets. The purpose of this article is to provide non-professional trustees with some guidance and common pitfalls. As they say, “you don’t know, what you don’t know.”

What is a Trustee?

A trustee is the person or entity responsible for fulfilling the terms of the Trust. A trustee may be a family member, a friend, a professional fiduciary or a corporate trustee. The trustee will hold legal title (as opposed to equitable title) to assets until the assets are distributed.

Primary Duties of a Trustee?

The first thing you should do if you are named as the successor Trustee is to see an attorney that is an expert is in Trust Administration.  Going at it alone is a recipe for future problems.  The second thing to do is gather as much information as possible about the decedent.

  1. Do you have the most recent estate planning documents?  People often update their estate plan throughout their lifetime.  Do you have a copy of the death certificate?
  2. What are the assets that belong to the Trust?  What assets pass outside of the Trust?
  3. What bills need to be paid immediately to eliminate the loss of valuable assets (e.g. mortgage payments on a home)?
  4. What assets require special attention? e.g. ongoing business, retirement accounts, etc.

A Trustee has the legal duty to carry out the directions set forth in your trust. As a fiduciary, the Trustee cannot derive personal benefit from the assets he or she is entrusted with. If the Trustee does not follow the directions set forth in your trust, they can be subject to personal liability. Some of the duties of a Trustee include taking a complete inventory of the assets when they begin to act as Trustee; obtaining a tax identification number for the trust; determining values of the assets in the trust, if necessary; investing the money in the trust for the benefit of the beneficiaries of that trust; paying expenses of the trust; preparing accountings for the beneficiaries of the trust; preparing tax returns for the trust; and distributing the assets in accordance with the terms of the trust.