A trust is an arrangement in which a person or institution (trustee) holds legal title to assets for the benefit of another person (beneficiary). If you are asked to be the trustee of a trust, it's not only a great compliment in regard to your character and judgment, but also a huge responsibility. The following are some general trustee duties. The trust document may add to these duties. You must follow the trust document very carefully.
- Fiduciary Responsibility. A trustee serves in a “fiduciary” role with respect to the beneficiaries of the trust. This means that someone has placed a lot of faith in you and you are required to act in the best interest of the beneficiary even if that conflicts with your own interests.
- Investment Standards. You must act as a prudent investor. Consider the interests of both current and future beneficiaries before deciding on how to invest the assets of the trust.
- Distributions. Consider the size of the trust and other beneficiary resources when making decisions on whether or not to make distributions to a beneficiary.
- Accounting, Taxes and Record Keeping. Give an account of all income to, disbursements from and expenses by the trust on an annual basis (or as required by your state's law) to the beneficiaries. You are responsible for seeing that necessary tax returns are filed. You should keep careful records of all transactions and never commingle your personal funds with trust funds. You are usually allowed to hire accountants etc. to file tax returns or prepare an accounting.
- Fees. Trustees are entitled to reasonable compensation for their services. Although family members don't usually accept compensation, it is customary for institutions that manage trusts (banks, law firms, trust companies) to charge a percentage of the funds under management.
In conclusion, serving as trustee gives you an incredible opportunity to provide a great service to the trust’s beneficiaries. The work can be very rewarding, but be mindful of the responsibilities described above to ensure that everything is in order. If you have questions about serving as trustee, feel free to contact our office for help
Source for post: Elder Law Answers
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