February 6

Before You Agree to Be a Trustee, Read This!

Being asked by a loved one to serve as trustee for their trust upon their death can be quite an honor, but it’s also a significant responsibility—and the role is not for everyone. 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.

Your responsibility as a 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. In light of this, you should carefully review the specifics of the trust you would be managing before deciding to serve.

Before you say yes, be sure you understand what it means to be a trustee. You might enjoy the opportunity to serve so long as you understand what’s expected.  On the other hand, you do not have to take the job, and declining to serve may not be an easy or practical option.

We offer a brief overview of what serving as a trustee typically entails. If you are 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

Although every trust is different, serving as a trustee comes with a few core requirements: managing assets held in the name of the trust, accounting for those assets, and following the terms of the trust regarding distributions of income and/or principal to the beneficiaries of the trust.  If you fail to abide by your duties as a fiduciary, you can face legal liability.

As a trustee, you will be acting as a “fiduciary,” meaning that you must act in the best interests of the beneficiaries of the trust. Regardless of the terms of the trust or the assets it holds or will hold, some of your key responsibilities as trustee include the following:

  • Identifying and gathering the trust assets
  • Determining what the trust’s terms require in terms of management and distribution of the assets
  • Hiring and overseeing an accounting firm to file income and estate taxes for the trust
  • 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 allowed to seek outside support from professionals in these areas, and highly encouraged to do so. The trust estate will pay for you to hire these professionals. Even though serving as a trustee may seem daunting, you won’t have to handle the job alone, and you may be paid to serve as a trustee of a trust.

That said, many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses, if that’s possible. How you are compensated will depend on the terms of the trust.

We Can Help

Since serving as a trustee involves such serious responsibility, you should meet with us to help decide whether to accept the role, and if you decide to accept the role, what you are required to do. 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 lawyer in estate planning to assist you with the trust’s administration. We can 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 Desmond Law, Personal Family Lawyer®. 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's 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.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

You may also like