A trust is designed to help with estate transfers. You give another party authority to handle your assets for a third party, who will eventually receive your estate.
Contrary to a will, a trust can’t usually be challenged in court. It’s activated when the grantor signs it, and it’s up to the trustee to handle the rest.
But what exactly is the role of a trustee? Here are some trustee responsibilities you should be aware of before assigning one.
Role of a Trustee
So, what is a trustee, anyway?
There are multiple roles involved in creating and managing a living trust.
The grantor creates the trust, and in the case of a married couple, could be as many as two people.
Management of the trust belongs to the trustee. In the case of a living trust, many grantors choose to be the trustee and continue managing their affairs while they can.
In the case of their death, a successor trustee steps in as their replacement. Usually, several successors are named, and in some cases, a corporate trustee is chosen.
The beneficiaries are the individuals or organizations who receive the trust when the grantor dies, as given by the trustee.
While a will helps to protect minors and any inheritance, a trust is meant more to protect your property and assets. As such, a trust is often a complex legal document that requires more specific information than a will would.
Some of the responsibilities of a trustee include a duty to the terms, to manage the trust efficiently, and to consider the beneficiaries.
A trustee’s main duty is toward the beneficiary and should not have any conflicts of interest with them. They also shouldn’t profit from their role other than an initial fee.
The trustee should be able to keep trust accounts and other records, which is why this task is often relegated to a corporate entity. Beneficiaries have the right to receive information about the trust, as well.
One trustee’s role is being familiar with the assets and liability, as well as knowing the purpose of the trust. Effective communication and record-keeping are key.
Although the role of a trustee can seem daunting, more often than not, a family member or close family friend is usually designated as one. When that happens, it may be best to hire a trust attorney to iron out the details.
An attorney can help make sure you don’t make any mistakes and get into legal trouble. They can also help with relevant investment or tax strategies.
And if you’re looking to name someone as a trustee, a trust attorney can point you in the right direction.
Protect Your Assets
The role of a trustee, first and foremost, is to protect your various assets after you die. They help pass your assets onto your named beneficiaries, and no one can contest the decision. It’s a financial decision you shouldn’t overlook.
For more financial tips, check out our other articles.