One of the most important decisions a person writing his or her trust needs to make is choosing who will be the trustee. However, not everyone knows what a trustee does. Below is a description of what a trustee does and why he or she is so important to the trust.

What Is A Trust?

A trust essentially is a legal entity, much like a company, but it allows the creator to manage his or her own assets through under the terms of the trust. A trust includes instructions for how the settlor or creator of the trust wishes for his or her financial affairs to be handled and who will receive them following his or her death.

Many different types of trusts exist, including revocable, irrevocable or testamentary. The most common form of trust used is a revocable trust, meaning that the settlor can have control over his or her assets, can modify the documents, add assets and remove assets so long as he or she is alive and competent.

Who Is The Trustee?

In the trust document, an individual is selected to serve as “trustee” over the trust. This person is the individual who follows the explicit instructions given in the trust document by the settlor on how the trust assets should be managed.

Many settlors choose to list themselves or their spouses as the initial trustee, especially if they are able to make decisions for themselves independently and competently.

After that, the settlor then choses others to act as “successor trustee.” Normally the spouse of the deceased is the successor trustee but not always. Many times, the settlor will list one or more of his or her adult children to be successor trustees. Other times, a corporate trustee, such as a bank or professional trust company, will be named.

The Role Of The Trustee

The Trustee is responsible for managing all aspects of the trust. This includes: investing assets, making distributions to beneficiaries, providing accountings to the beneficiaries, and following all rules of administration laid out in the trust document.

The trustee typically pays the bills for the trust administration and beneficiaries (if authorized by the trust), makes investments to ensure that the money is being handled responsibly and ensuring that assets are not squandered or depleted.

This job can also include making sure that the beneficiaries do not take distributions not authorized by the trust, and that can mean handling difficult family dynamics.

Responsibilities Of The Trustee Following The Settlor’s Death

  • Survey The Situation
    Following the death of the Settlor, the trustee needs to first identify all property and debts of thetrust, review the terms of the trust with an attorney to ensure the trustee understand how the trust must be adminsitered. These first steps will help him or her determine how the Settlor wanted property distributed and what type of property exists.
  • Invest The Trust Assets
    The trustee may also be responsible for investing the assets to make sure that they are preserved and grow. If the beneficiaries are minor children, and the Settlor is the parent, the parent may have wanted to ensure that the assets of the trust are preserved and invested in such a way that they increase in value for the children to use at a later date. In these situations, the trustee is responsible for investing the trust estate to make sure it grows as a reasonable and prudent investor.
  • Administer The Trust
    The trustee is also charged with administering the trust according to the express terms given in the trust. This involves making distributions to beneficiaries, selling property, as needed, investing it as directed and ensuring that all bills are paid. This also includes ensuring that all records and tax statements are prepared and filed, as needed. The trustee also must keep in contact with the beneficiaries and respond to any questions or concerns they may have.
  • Act On Behalf Of The BeneficiariesThe biggest concern the trustee should have is that he or she is responsible to the beneficiaries. In fact, all decisions need to be made with the best interests of the beneficiaries in mind. After all, the Settlor created the trust with them in mind and picked the trustee because he or she believed that person could act in the best interests of the beneficiaries. If the trustee is not acting on their behalf, this could cause the trustee to be removed from his or her position.

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