Trustees

A trust is a legal entity that can “own” assets.  What is a trustee? What do I do?

Similar to a will, a trust includes instructions for whom you want to handle affairs related to the trust after you die (the trustee).  

Acting as a trustee is a complex and often time consuming role, as the responsibilities of the trustee exist so long as the trust is active.  This means that a trustee may have to serve in that role for decades after the guarantor passes away.  This is different than the executor, whose responsibilities to the estate end with the successful distribution of all assets that are not connected to the trust.

Responsibilities of a Trustee

  • Fiduciary Responsibility. As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of the trust. As a fiduciary, you are responsible for the meticulous management of all of the assets of the trust.
  • The Trust’s Terms.  A trustee must familiarize themselves with all of the intricacies of the trust. The trust will dictate exactly how assets should be allocated, and as such the trustee must develop a deep working knowledge of the document.
  • Investment Standards.   The trustee has the responsibility to make sound investments on behalf of the trust and its beneficiaries.  When making decisions with regard to the trust, the trustee must holistically consider the needs of all of the beneficiaries and act accordingly.
  • Accounting.  One of your primary jobs of the trustee keep a detailed account of all income to, distributions from, and expenditures by the trust.  Generally, you must give an account of this information to the beneficiaries on an annual basis, though you need to check the terms of the trust to be sure.
  • Taxes. Depending on whether the trust is revocable or irrevocable and whether it is considered a “grantor” trust for tax purposes, the trustee will have to file an annual tax return and may have to pay taxes.  In many cases, the trust will act as a pass through with the income being taxed to the beneficiary.  In any event, if you keep good records and turn this over to an accountant to prepare, this should not be a big problem.
  • Delegation.  While you cannot delegate your responsibility as trustee, you can delegate all of the functions described above.  The trustee, can make the decision to hire additional resources to help with the management of the trust.  We highly encourage Trustees to engage the use of a lawyer to help navigate the complexities of this role.

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