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If You Have Been Asked To Serve As a Trustee, Here is What You Should Know

If a family member or friend has asked you to serve as trustee for their trust either during their life, or upon their death, it is a big honor—this means they consider you among the most honest, reliable, and responsible people they know.

That said, serving as a trustee is not only a great honor, but it is also a major responsibility, and the role is definitely not for everyone. Serving as a trustee entails a broad array of duties, and you are both ethically and legally required to properly execute those duties or you could face liability for not doing so.

In the end, your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the trust you would be managing before making your decision to serve.

Remember, you do not have to take the job. That said, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might actually enjoy the opportunity to serve, so long as you understand what is expected of you.

With this in mind, here we will give you a brief overview of what serving as a trustee typically entails. For help in making your decision, contact us so we can detail exactly what your specific trust would require of you. And as we will discuss more below, if you do accept, we can also help you carry out your responsibilities, so rest assured, you would not have to handle things all by yourself.

A Trustee’s Primary Duties Although every trust is different, serving as a trustee comes with a few core requirements. These duties primarily involve accounting for, managing, and distributing the trust’s assets to its named beneficiaries as fiduciaries.

As a fiduciary, you have the power to act on behalf of the trust’s creator and beneficiaries, always putting their interests above your own. In fact, you have a legal obligation to act in a trustworthy and honest manner, while providing the highest standard of care in executing your duties.

This means that you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. And if you fail to abide by your duties as a fiduciary, you could face legal liability. For this reason, you should consult with us for a more in-depth explanation of the duties and responsibilities a specific trust will require of you before agreeing to serve.

But regardless of the trust or the assets it holds, some of your key responsibilities as trustee include:

  1. Identifying and protecting the trust assets

  2. Determining what the trust’s terms require in terms of management and distribution of the assets

  3. Hiring and overseeing an accounting firm to file income and estate taxes for the trust

  4. Communicating regularly with beneficiaries

  5. Bringing in the right investment management team to manage the trust assets

  6. Being scrupulously honest, highly organized, and keeping detailed records of all transactions

  7. Closing the trust and distributing the assets when the trust terms specify

Experience NOT Required It is important to point out that being a trustee does NOT require you to be an expert in the law, finance, taxes, or any other field related to trust administration. In fact, trustees are not only allowed to seek outside support from professionals in these areas, but they are also highly encouraged to do so, and the trust estate will pay for you to hire the support you need.

So even though serving as a trustee may seem daunting, you would not have to handle the job alone. And you are also able to be paid to serve as trustee of a trust should you choose to accept the role.

That said, many trustees, particularly close family members, often choose to forgo any payment beyond what is required to cover the trust expenses, if that is possible. The way you are compensated as a trustee will depend on your personal circumstances, your relationship with the trust creator and beneficiaries, as well as the nature of the assets in the trust.

We are Here To Help Because serving as a trustee involves such serious responsibility, you should meet with us for help deciding whether or not to accept the role. We will offer you a clear, unbiased assessment of what is required of you based on the specific trust’s terms, assets, and beneficiaries.

And if you do choose to serve, it is even more important that you have someone who can assist you with the trust’s administration. We will guide you step-by-step throughout the entire process, ensuring you properly fulfill all of the trust creator’s wishes without exposing the beneficiaries—or yourself—to any unnecessary risks. Contact us today to learn more.

This article is a service of Reflections Life Planning LLC. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That is why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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