Being asked by a loved one to serve as Trustee of their Trust is an honor, but it’s also a significant responsibility—and it’s not for everyone. Your family member or friend clearly trusts you more than anyone else to support their family when they won’t be able to anymore, but you need to understand that serving as a Trustee entails a broad array of duties, and you are both ethically and legally required to execute those duties or face potential liability.

Before you say yes, please take the time to fully understand what it means to be a Trustee.

Every situation will be different and your responsibilities as Trustee will vary greatly depending on the size of the estate, the type of assets covered by the Trust, the type of Trust, how many beneficiaries there are, and the document’s terms. That’s why you should carefully review the specifics of the Trust you would be managing before deciding to serve.

And remember, you don’t have to take the job.

Yet, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might enjoy the opportunity to serve so long as you understand what’s expected.

This article will provide you with a brief overview of what serving as a Trustee typically entails. If you’re asked to serve as Trustee, feel free to contact us to support you in evaluating whether you can effectively carry out all the duties, or if you should politely decline.

A Trustee’s Primary Responsibilities

Even though every Trust and “estate” will be different, serving as a Trustee comes with a few core requirements and responsibilities: (1) managing assets held in the name of the Trust, or working with financial professionals who are doing it for you; (2) keeping up with an accounting of those assets; and (3) following the terms of the Trust regarding distributions of income and/or principal to the beneficiaries of the Trust.

Remember, a Trust is simply an agreement between the grantor and a Trustee. The grantor distributes their assets to the trust and the trustee holds and manages the assets “inside the Trust” for the benefit of the beneficiaries.

As a Trustee, you will be acting as a “fiduciary,” meaning that you must follow the terms of the Trust and act in the best interests of the Trust’s beneficiaries.  If you fail to abide by your duties as a fiduciary, you can face legal liability. For this reason, if you are named as a Trustee, you should consult with an experienced attorney to review the Trust Agreement and provide you with an analysis of the specific duties and responsibilities required of you before you agree to serve.

Regardless of the terms of the Trust or the assets it holds or will hold, some of your key responsibilities are:

●         Identifying and gathering the Trust assets

●         Determining what the Trust’s terms require regarding management and distribution of the assets

●         Hiring and overseeing an accounting firm to file income and estate taxes for the Trust

●         If necessary, working with financial advisors or institutions who manage any of the investments

●         Communicating regularly with beneficiaries

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

●         Closing the Trust when the Trust terms specify

No Experience Necessary

It’s 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. Trustees are not only allowed to seek outside support from professionals in these areas, but they’re also highly encouraged to do so, and the Trust estate will pay for you to hire and work with these professionals.

So even though serving as a Trustee may seem daunting, you won’t have to handle the job alone. Depending on the terms of the Trust, you’ll most likely also get paid for your time to serve as a Trustee of a Trust. Although in our experience many Trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the Trust expenses.

We Can Help

Serving as a Trustee is a serious responsibility and if you need, we’re here to help. As your trusted advisor, we can help you decide if you want to accept the role. We can offer you a clear, unbiased assessment of what's required of you based on the Trust’s terms, assets, and beneficiaries.

If you choose to serve, it’s even more critical to have an experienced estate planning lawyer assist you with the Trust’s administration. As your Personal Family Lawyer®, we can guide you throughout the entire process, ensuring you properly follow the terms of the trust and your family or friend’s wishes, without exposing the beneficiaries—or yourself—to any unnecessary risks.

Contact us today to learn more.

This article is a service of Family Wealth & Legacy Legal Solutions (FWLLS). We do not just draft documents; we ensure you make educated, informed and empowered decisions for yourself and the people you love. That's why we offer a Family Wealth & Legacy Strategy Session™, during which you will get educated and begin to prepare to avoid life’s most common legal problems and get a plan in place to make the best possible choices for the people you love. You can begin by calling our office today to schedule a Family Wealth & Legacy Strategy Session and mention this article to find out how to get this $750 session at a significantly discounted rate, or even for free.