If you want to have trust in your trust, it is essential you choose the right trustee. Many people choose to be their own trustee (who can you trust if not yourself, after all?). Others share trusteeship with their spouse, so if one partner dies, the other can handle the trustee duties without any delay. Still others choose a trusted friend, a family member, or even a loyal professional. Before you can choose a trustee for your estate or act as a trustee for someone else’s, you need to know exactly what a trustee’s responsibilities are. Your attorney will be instrumental at this stage of the game, but if you want a head start, we’re here to help. What are the duties of a trustee? Scroll down to find out.
What Are the Duties of a Trustee?
Let’s start with the basics. When it comes to a trust, the trustee is in charge of management. They are named by the grantor (the owner and maker of the trust) and they distribute assets to the beneficiaries. If the trustee passes away or becomes incapacitated, the successor trustee steps up and takes on the role of trustee. So exactly what are the duties of a trustee?
FOLLOW DIRECTIONS. This is the most important duty of a trustee. The trust document will include instructions so the trustee understands the wishes of the grantor, and the trustee should follow these directions dutifully. INVEST. One of the trustee’s main duties is to invest the trust’s assets. To ensure the assets aren’t squandered, the trustee should invest them in a way that minimizes risk and ensures growth. Conservative investment methods are preferred. If the trustee isn’t confident with this task, they might choose to work with a financial professional. PROTECT. As they invest and manage the assets, the trustee must also protect the assets inside the trust. The trustee needs to have integrity. They must keep the trust’s assets separate from their own assets, never using them for their own gain. It’s also important that the trustee is fair and impartial. Unless the grantor specifies otherwise, all of the beneficiaries must be treated equally. RECORD. The trustee needs to keep records of all the work that they do. This includes tax returns and reports to the beneficiaries. The records should be thorough, accurate, and organized. The trustee might choose to work with an accountant and/or attorney to ensure the records are well-kept. ACT. When the grantor passes away or becomes incapacitated, it is the trustee’s job to step in and manage their financial affairs. This will include some or all of the following duties:
- Reviewing the trust agreement and its instructions.
- Taking care of the grantor during any period of disability.
- Providing the physician with documents related to the grantor’s medical care (ex: medical power of attorney, living will, etc).
- Notifying family, friends, and other loved ones.
- Reviewing the grantor’s insurance.
- Asking the physician to document the grantor’s state of incapacity.
- Looking after minors or dependents.
- Reviewing the assets, including their location and value.
- Applying for disability benefits on behalf of the grantor.
- Paying bills.
- Recording expenses (income, bills, etc).
- Meeting with the trust’s attorney after the grantor’s death.
- Collecting death benefits and placing them in an account.
- Notifying the grantor’s bank of the grantor’s death.
- Preparing income and estate tax returns.
- Distributing the assets and transferring titles.
– – – – –
The duties of a trustee should not be underestimated. Take your time and choose the right person for the job. Live in southwest Missouri? Consider contacting the attorneys at Parks & Jones. We would be happy to help you build or update your estate plan. Give us a call at 417-823-9898 or click here to schedule a free consultation.