Being asked by a loved one to serve as trustee upon their death can be quite an honor, but it’s also a major responsibility—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 face potential liability.
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, the type of trust, the number of beneficiaries, and the document’s terms. You should carefully review the specifics of the trust you would be managing before making your decision to serve.
Remember, you don’t have to take the job.
However, 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, as long as you understand what’s expected of you.
This article offers 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 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 a fiduciary.
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. 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 you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. If you fail to abide by your duties as a fiduciary, you can 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.
Regardless of the type of trust or the assets it holds, some of your key responsibilities as trustee include:
- Identifying and protecting the trust assets
- Determining what the trust’s terms require in regards to 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 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, they’re highly encouraged to do so. Trust estate will pay for you to hire these professionals.
Even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. You are also eligible to be paid to serve as trustee.
Many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses. However, how you are compensated will depend on your personal circumstances, your relationship with the trust’s creator and beneficiaries, as well as the nature of the assets in the trust.
We Can Help
Serving as a trustee involves serious responsibility. You should meet with your Family Wealth Lawyer for help deciding whether or not 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 do choose to serve, it’s even more important that you have someone who can assist you with the trust’s administration. As your Family Wealth Lawyer, 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 Elena Ortega-Tauler, Family Wealth Lawyer. We don’t 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.