You’re now a trustee of a trust. That’s an important responsibility and one that you should take seriously. As a trustee, you’ll be responsible for managing the assets and investments of the trust. This post will help you understand what your role is as a trustee. This also includes what you need to do on an ongoing basis when serving in this capacity. In short, you may have thought to yourself, I’m a new trustee, what now? We’re here to help!
Your role of as a trustee
As a trustee your main role is to manage the trust and its assets. This means you must do what is best for the trust and its beneficiaries, not yourself.
In order to ensure that you are acting in the interests of all parties, you must make sure that:
You have access to a complete copy of the trust document (this will be available from your lawyer).
Secondly, you should keep accurate records of all transactions involving the trust assets.
Finally, you account for yourself at least once a year.
Can I become a trustee?
You must be at least 18 years old in order to be eligible. You should also be a resident of the same country and state as the person who created the trust. In addition, you cannot be bankrupt or convicted of certain offenses. Keep in mind you cannot really become a trustee, only appointed as such.
If you meet these requirements, then it’s worth considering how you can help your beneficiaries. Beneficiaries are the people whose property the trust is protecting.
What do I do as a trustee?
As a trustee, you are responsible for the trust property and must act in the best interests of the beneficiaries.
The terms of your trust will dictate how you carry out your duties. You also have a duty to follow those terms. In addition, you must keep accurate records and report to the beneficiaries periodically so that they can monitor how things are going.
Example of a trustee's task
You are responsible for managing the trust assets and liabilities. That means you must make sure that you collect and invest the trust income properly. You also have to pay the bills and expenses, and that you file taxes on a timely basis.
As trustee, you will also be in charge of making sure that you administer the trust according to its terms. This includes reviewing annual accounting statements from the person who manages your trust’s investments. These people are investment managers. You should also ensure that all distributions made by the investment manager were done correctly and in accordance with your instructions. Make also sure everything is up-to-date with government agencies such as IRS or state tax departments.
How long does a trustee serve for?
This mostly depends on the trust document and clauses. Some trusts appoint Trustees for a specific term. Some others allow them to serve until they resign or until the death of the settlor. The settlor is the person who created the trust. It’s also common for there to be a limit on how many times a particular individual can hold this office.
Can I be removed as a trustee?
A trustee may be removed by the settlor of the trust. Additionally, a beneficiary of the trust can get a court to remove a trustee. That’s useful if they can prove that removal is in the best interests of all beneficiaries. Or especially if there was fraud or misconduct in making investments with his or her funds. The trust document may also specify who has power to remove a trustee.
What about co-trustees who serve with me?
The size of a trust should be determined by the amount of money you have and how you want to manage it. Usually, people will appoint a family member or friend as co-trustee with them. This means that there will always be someone with knowledge of the trust who can help run it.
It’s important for co-trustees to discuss their roles in running the trust. You have agreed on what each one is responsible for doing. And especially if there are disagreements between you about how best to handle certain issues (like whether or not to sell an asset). It’s also important that both parties feel comfortable working together. Let’s say one person feels like they aren’t being listened too or taken seriously by their co-trustee. This could lead down an unhappy and even dangerous path!
Can I name myself as a beneficiary of the trust?
In short no, you can’t. You should also not benefit from the trust indirectly. For example, say that you are a trustee and receive income generated by investments under the terms of that trust. If you know in advance what those investments will be, this would be an example of indirect benefit to yourself. Conflict of interest is important here so avoid any possibility where your interests conflict with your duties as a trustee.
Find out when you'll be serving as trustee
It’s important to know the date you’ll be serving as trustee. This will help you prepare for what’s in store. You should also keep in mind that there might be successor trustees. For example, one of these is could be that your trust must provide for a successor trustee if you die before serving all of your term as trustee.
Read the trust if possible
It’s important to read the trust, if possible. In fact, it’s the first thing you should do as a new trustee. The trust will tell you what your duties and responsibilities are and who you can talk to about them (such as an attorney. It will also inform you about whether or not there are any special rules that apply to you. What happens if you don’t find any records regarding this trust document anywhere else in your possession? Then try looking at other documents from your parents’ estate: maybe they kept copies around somewhere?
Provide Accounting
As a trustee, you’re responsible for keeping documentation of all your actions as trustee. These documents are proof of your actions and you can use them to provide accounting to beneficiaries. For example, if you purchase something on behalf of the trust, keep receipts and invoices as proof. This will help when it comes time to settle taxes at the end of the year. Same thing for any investments or any third-party appointments that you may have made.
Final Thoughts
Someone has chosen you to serve as a Trustee. This means you’re part of an important team that keeps our community strong. I want to help you make the most of this opportunity by giving you some tips for what will be one of your most important roles. As a new trustee, it’s essential that we understand what our responsibilities are and how to fulfill them successfully so we can all feel proud about our work together!
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