If you are in the process of writing a trust document, you’ll need to name a trustee. It’s one of the most important decisions you will make; however, not everyone knows exactly what a trustee does. In today’s blog, we’re taking a look at what a trustee’s responsibilities are, who can serve, and how to select the right trustee for you.
What is a Trust?
A trust is a legal entity that allows its creator (also known as the trustor, grantor, or settlor) to manage their assets through the terms of the trust. Trusts are designed to accomplish an estate planning goal. The trustor can create instructions as to how the finances or property in the trust should be handled and who will receive those assets after the trustor’s death.
There are many different types of trusts, including revocable, irrevocable, testamentary, living, charitable, special needs, and spendthrift. One of the most common types of trusts is a revocable trust. With a revocable trust, the person who created the trust can add or remove assets, change the terms, or revoke the trust at any time, as long as they are still living and mentally competent.
Who is the Trustee?
When a trustor creates a trust, they also name a “trustee” who will manage the trust and follow any special instructions. A trustee has a fiduciary responsibility for managing those assets and acting in the best interests of the trustor and any beneficiaries. (If they violate those fiduciary duties, the trustee can be held personally liable).
Under Georgia Law, if you can legally own property, then you can serve as a trustee. The general rule is that the trustee is a US citizen, over the age of 18. Many trustors initially appoint themselves as the trustee, so they can continue to manage their own assets. Trustors may also appoint their spouses, adult children, or trusted friends and advisors. You can also name a corporate entity such as a bank or a professional trust company as the trustee of your trust.
What are the Trustee’s Roles and Responsibilities?
A trustee manages all aspects of the trust. They invest assets, make distributions to beneficiaries, provide financial reports to the beneficiaries, and follow any other rules of administration laid out in the trust document. A trustee may pay the bills for the trust administration and beneficiaries, manage investments, and ensure that the trust assets are not squandered or depleted. They also monitor activity and make sure that no one is taking unauthorized distributions. When the trustor passes away, the trustee is responsible for:
- Reviewing the terms of the trust
- Identifying all property in the trust
- Identifying any debts and paying creditors, if needed
- Administering the trust as per the trustor’s terms and instructions
- Continuing to invest and monitor the trust assets
- Make distributions to beneficiaries
- Selling trust assets, if necessary
- Preparing and filing all records and tax statements
- Addressing any beneficiary questions or concerns
What Traits Should You Look For in a Trustee?
Selecting a trustee is an important decision, as they’ll be the one managing the assets, and eventually, the assets of your loved ones. Who you choose can depend on the type of trust you’re creating, but overall, you want the individual to be trustworthy. They should be good with money and familiar with the basic concepts of investing.
If you’re having trouble picking a trustee, you can consider naming co-trustees or building flexibility into the trust by allowing others (ex: spouse, children, beneficiaries) to remove and replace the trustee. Depending on the type of trust, you can set up the legal entity so that your children or beneficiaries choose the trustee upon your death.
Have Any Additional Questions? Contact Brian N. Douglas & Associates
If you are interested in creating a trust and have questions about the process, please reach out to our team of experienced estate planning attorneys. You can call (770) 933-9009 or use our online contact page. We’re always happy to help!