If You’ve Been Asked to Serve as Trustee, Here’s What You Should Know
It is an honor to be asked to serve as trustee for a family member or friend’s trust. A trustee should be honest, reliable, and responsible, so if you are asked to serve as trustee, whether in their lifetime or upon their death, you know that they trust you.
Serving as a trustee is a major responsibility, and the role is definitely not for everyone. It entails a broad array of duties, and you are ethically and legally required to properly execute those duties, or you could face liability.
Your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, how many beneficiaries there are, and the document’s terms. You should carefully review the specifics of the trust you would be managing before making your decision to serve.
You do not have to accept the job. Depending on who nominated you, declining to serve may not be an easy or practical option. Or you might enjoy the opportunity to serve, so long as you understand what’s expected of you.
We’ll give you a brief overview of what serving as a trustee typically entails. For help in making your decision, contact us, and we can detail what your specific trust would require of you. If you do accept, we can also help you carry out your responsibilities, so rest assured, you won’t have to handle things all by yourself.
A Trustee’s Primary Duties 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, by 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.
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 could face legal liability. Our firm can provide an in-depth explanation of the duties and responsibilities a specific trust will require of you before you agree to serve.
Regardless of the trust or the assets it holds, trustee’s responsibilities include:
Identifying and protecting the trust assets
Determining what the trust’s terms require for management and distribution of assets
Hiring and overseeing an accounting firm to file income and estate taxes for the trust
Communicating regularly with beneficiaries
Bringing in the right investment management team to manage the trust assets
Being honest and organized
Keeping detailed records of all transactions
Closing the trust and distributing the assets when the trust terms specify
Experience NOT Required
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, but they’re also highly encouraged to do so – the trust estate will pay for you to hire the support you need.
Even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. You are also able to be paid to serve as trustee of a trust should you choose to accept the role.
That said, many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses. The way you are compensated as a trustee will depend on your personal circumstances, your relationship with the trust creator and beneficiaries, and the nature of the assets in the trust.
We’re Here to Help Because serving as a trustee involves such responsibility, we can help you make an informed decision on accepting the position. We will give 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 important that you have someone who can assist you with the trust’s administration. We can guide you step-by-step throughout the entire process, ensuring you properly fulfill 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 Jennifer Winegardner of Rayboun Winegardner, PLLC. 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.