Whether setting up a legal trust or being asked to serve as a trustee, it is essential to clearly understand the rights and responsibilities of the trustee role. When a legal trust is created, a person or an institution (such as a bank or law firm) must be named as the trustee. This individual or entity will have control over the management of the assets contained within the trust, making clear the need to fully understand the duties of the trustee role prior to entering into such an arrangement.
Know the Terms of the Trust
As a trustee you will be responsible for administering the assets contained within the trust. You do not, however, get to make arbitrary decisions about those assets. Instead, you must manage them in accordance with the instructions included with the trust itself. Reading the trust when you are initially appointed, and then referring to it before taking any type of action, will help ensure you are honoring the wishes of your loved one and complying with the trust’s mandates.
Putting the Interests of the Beneficiary First
While there should be sufficient instructions included in the trust to guide you when it comes to fulfilling the goals of the trust, you will still have to make a number of decisions on your own. For example, deciding where to invest money, when to sell property, and many other logistical details will likely be left to you. Nonetheless, all trustees have a fiduciary responsibility to make decisions based solely on the best interests of the beneficiary of the trust. This means you could be held liable if you attempted to use your trustee role to personally profit or help someone other than the beneficiary of the trust.
In most situations, a trustee needs to adhere to commonly accepted investment standards that have been in place for quite some time. This typically means avoiding any type of high-risk investments that could cause the trust to lose a significant amount of value very quickly.
In most situations, the trustee will be tasked with distributing the assets contained within a trust. You will have to read through all relevant estate planning documents and distribute the property held in trust in accordance with the wishes of the trustor (i.e., the person or business that created the trust). Prior to distributing the property, you may also have to have the contents of the trust properly appraised.
You Don’t Have to Do it On Your Own
There are a lot of responsibilities that will fall on the shoulders of a trustee. There is nothing, however, that says you must handle them all on your own. Having an experienced attorney at your side will help you to avoid mistakes and ensure everything goes smoothly. Contact us to go over your options today.