A trustee can be a person or an institution, but the fact remains that the role of a trustee is an important one. A trustee is appointed to manage a trust for the benefit of trust beneficiaries. The trustee must, at all times, manage the trust in the best interests of trust beneficiaries. Furthermore, the duties of a trustee in regard to the trust are fairly extensive. We’ll talk more about those here.
Duties of a Trustee
A trustee must carefully review the terms of the trust. As questions arise, the trustee should continue to refer back to the terms of the trust as those are the touchstone for how the trust should be managed. It provides the blueprint for when trust distributions should be made and how. It will also dictate whether trust income or trust principal should be distributed as well as what reports need to be made to trust beneficiaries.
Part of managing a trust will involve investing trust assets. Trustees are not only tasked with this but must be incredibly careful in doing so. Investments must be prudent. This means that trustees should avoid overly speculative or high-risk investments. Trustees also need to take into account the best interests of trust beneficiaries and their present and future financial needs.
Trustees must also make appropriate distributions to trust beneficiaries. The terms of the trust, of course, often largely dictate when such distributions are appropriate, but it is also quite common for the trustee to need to exercise discretion when considering such distributions. The current and future needs of the beneficiary will need to be considered in distribution decisions as will other resources at the beneficiary’s disposal. Oftentimes, it will not be the job of the trustee to make the distribution but to instead say “no” to a beneficiary’s request for such a distribution.
Trustees are also tasked with accounting for the trust. The trustee must keep a record of all trust income generated as well as any distributions made from or expenditures paid from the trust. The trust accounting must usually be shared with the beneficiaries each year. The terms of the trust may, however, dictate otherwise.
Taxes are another responsibility that is within the purview of the trustee. The trustee, however, can delegate the calculating and filing of state and federal taxes to a certified public accountant or other qualified professional. The trustee, however, will be responsible for providing the person preparing the taxes with the relevant and necessary records and other information.
It is important to note that trustees are entitled to collect a reasonable fee for the work they put into managing a trust. What is reasonable will depend on a number of factors, such as how complicated the contents of the trust to manage.
Estate Planning Attorneys
For assistance establishing a trust as well as selecting the right trustee to manage your trust, you can count on the estate planning team at Jones, Gregg, Creehan & Gerace for assistance. Contact us today.