Trustees manage trust assets, protect beneficiaries, keep records, pay bills, file taxes, and follow the trust document. Review trustee duties during incapacity, death, asset distribution, compensation, and resignation.
By Brad Nakase, Attorney
Email | Call (888) 600-8654
Have a quick question? I answered nearly 1500 FAQs.
During the estate planning process, a number of trust arrangements can be used to achieve various goals. One characteristic that all trusts have in common is the choice of a trustee to manage their assets. If you are selected and appointed as a trustee of someone’s trust, you must be aware of your responsibilities.
This article will discuss the responsibilities of a trustee, the process of choosing a trustee, and other subjects.
The individual who makes the trust is referred to as the grantor. Married couples are co-grantors when they create a single trust together. Modifications to the trust can only be made by the grantor/grantors.
The trustee oversees the trust’s assets. For as much time as they are able, many grantors decide to serve as trustees and continue to oversee their affairs. Married couples often act as co-trustees. There is a possibility that one of them passes away or becomes disabled. The surviving spouse may continue to manage their finances. There is no need for extra steps (judicial intervention).
A successor trustee takes over and oversees the trust if a trustee is unable to continue (because of death or disability).
If one or more are not able to act, others are usually named in succession. A company trustee may be appointed, or children (adults) may be named to function jointly. It’s a mix of the two in some situations.
The people or institutions who will get the trust’s assets upon the grantor’s passing are the beneficiaries.
A trust is a type of legal body that has the ability to own property. A trust specifies who will manage the grantor’s ultimate affairs, much like a will. It additionally specifies who will inherit the grantor’s assets upon their passing.
Various kinds of trusts consist of:
These days, a lot of people include both a will and a revocable life trust in estate planning. When a person passes away or becomes incapacitated, a revocable living trust inhibits court intervention (probate). It’s also adaptable. The grantor can amend the paper, remove or add assets, or discard it if they are still living and competent.
The grantor ought to move assets to a living trust so that it functions. They have to adopt the trust’s name, not their own. What kinds of assets ought to be given to the trust has to be discussed by the grantor with an estate planning professional.
The grantor becomes disabled or passes away. The court is not going to intervene because its name is not on the titles. It supports the trustee’s ability to assume control and handle the grantor’s financial concerns.
The provisions of the trust should be explained to you by the grantor. This includes the locations of important paperwork, such as the following:
If the grantor refuses to demonstrate to you the valuations of the trust possessions, don’t take it personally. Some people keep their financial information very private.
Trust has to be updated with the correct titles & beneficiary designations. For example, annuities & personal retirement accounts can designate the trust as a supplemental beneficiary.
Learn the names of the trustees & successor trustees, the sequence in which you will act, and if you are going to act by yourself or with others.
Many people ask what the responsibility of a trustee is when they are appointed to oversee a family trust.
Remember that they aren’t your assets when you assume the role of trustee. You are protecting them for the good of the grantor, when they are still living, & their descendants, who will receive them when the grantor passes away.
You are required to follow the rules outlined in the trust declaration:
Speaking with an estate planning attorney can help if you are unsure what the responsibility of a trustee is.
Professionals may assist, especially with bookkeeping and investment. You may additionally need to consult a lawyer. However, in your role as trustee, the beneficiaries will ultimately hold you responsible for the smart management of the trust’s resources.
Guidelines on how to ascertain whether or not the grantor is incapacitated are typically included in the trust instrument. It may be necessary for a physician to attest to the grantor’s physical or mental incapacity to handle their financial matters.
If any property has been moved to the trust, you can take on the position of trustee & manage the grantor’s financial activities without the court’s involvement. You should fully understand what the responsibility of a trustee is under state law.
The grantor becomes incapacitated: What will a trustee do?
You can now start performing any necessary tasks, like receiving & depositing money, paying bills, & using the grantor’s assets to sustain them and their dependents until they die or recover.
Maintain thorough documentation of all medical costs. Submit any claims as soon as possible. Maintain a record of the money you have received and the invoices you have settled. An accountant may teach you how to properly post these records. Trustees are required to keep correct records and make wise investments. Beneficiaries may question what the responsibility of a trustee is if trust funds are mismanaged.
The trust can mandate that you give an accounting to the beneficiaries. Keep in mind both income & property tax.
What happens if the grantor recovers?
You resume your position as successor trustee or co-trustee. The grantor starts handling their own money. The court is not involved in any way.
The trust has effectively been dissolved.
In case the assets are to remain in the trust (such as for the surviving spouse, children, taxation obligations, or if beneficiaries will get the assets in installments), every trust must have a fresh tax identification number. It will be necessary to develop adequate bookkeeping & reporting.
The trustees are in charge of making sure everything is completed correctly and on schedule. Keep in mind that a corporation trustee, lawyer, and accountant can help.
It is true that trustees have the right to just recompense for their labor. The trust paper should contain guidelines. The counsel will base your payment on the state’s case or relevant statutes if this information is absent from the document.
Seek help from a bookkeeper, counsel, or accountant of the company. A corporate trustee may manage investments and documentation.
If your responsibilities to your household, your career, or other circumstances prevent you from handling the responsibilities, you are allowed to leave. The new trustee will come next. Usually, a trustee within the company can be appointed if there isn’t any available or willing replacement trustee.
You are not required to assume the function of trustee only because the grantor has appointed you. If you don’t want to be a trustee, the counsel helping with the trust’s management may ask you to accept a document. The subsequent named trustee may thereby assume the position of acting trustee.
Have a quick question? We answered nearly 2000 FAQs.
See all blogs: Business | Corporate | Employment Law
Most recent blogs:
Contact our attorney.