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Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. You have money questions. Bankrate has answers. In general, the trust document will set out the rights, obligations, and duties that a trustee has in relation to the assets that the trust holds. The trustee never has legal title or ownership over the property that they administer.
Instead, they hold the assets for someone else, often on behalf of another person. A trustee is entrusted with the power to make decisions about trust assets.
That person or entity who fulfills the role of a trustee must be honest and trustworthy. Because assets are put under their charge, it will be tempting to use those assets for their own purposes. Trustees are not permitted to use trust assets for themselves—and that kind of misappropriation can lead to civil litigation and money damage awards. Technically, wills do not have trustees. However, a will can develop a trust, creating a trustee. In fact, the executor and the trustee of this newly created trust can sometimes be the same person.
However, even though there is some overlap, the estate property and the trustee property may not all be the same. The trustee also only administers and takes care of the property that the trust owns. The executor, on the other hand, administers any and all property that a decedent owns. As a result, the executor will often administer a much wider variety of property and assets. A trustee may be in charge of liquidating assets, but that is not often the case.
Instead, a trustee is often charged with holding and maintaining the property for a longer period of time. Do not sell or distribute any assets before you meet with the attorney. Before the meeting, make a preliminary list of the assets and their estimated values. If there is a surviving spouse or if the trust has a tax planning provision, the attorney may need to do some tax planning right away.
The trust may also need a tax identification number. If all assets have been properly accounted for, either through transfers to the trust or the use of beneficiary designations, then a probate proceeding will likely not be necessary.
The trustee is responsible for seeing that everything is done properly and on time. You may be able to do much of this yourself, but an attorney, corporate trustee, or accountant can give you valuable guidance and assistance. Here is an overview of what needs to be done. If the assets are to stay in a trust for minors, for a surviving spouse, for tax purposes, or if the beneficiaries will receive their inheritances in installments , each trust will need a new tax identification number, and proper bookkeeping and reporting procedures will need to be established.
Yes, trustees are entitled to reasonable compensation for their services. The trust document should give guidelines. Consider hiring an attorney, bookkeeper, accountant, or corporate trustee to help you. A corporate trustee can manage the investments and do the record-keeping. If you feel you cannot handle any of the responsibilities due to work, family demands, or any other reason, you can resign and let the next successor trustee step in.
If no other successor trustee has been named, or none is willing or able to serve, a corporate trustee can usually be named. Remember, just because the grantor nominates you to serve as trustee does not mean you have to accept the trustee position. If you do not wish to serve, the attorney assisting with the administration of the trust may ask you to sign a document in which you officially decline to serve as trustee.
This declination document will allow the next trustee in the trustee succession line to assume the role of acting trustee. Duties and Responsibilities of a Trustee. November 5, Successor trustees can relax a bit because they do not need to do anything right now.
Successor trustees only begin to act when the trustee of a trust dies or becomes unable to manage financial affairs due to incapacity. If you have been named as a trustee, you may already be acting in this capacity. In either case, it is important that you understand your duties and responsibilities. Who are the people involved with a living trust? What is a trust? How does a living trust work?
What do I need to know now? What responsibilities will I have as a trustee? For example, you must follow the instructions in the trust document: You cannot mix trust assets with your own.
You cannot use trust assets for your benefit unless the trust authorizes it. A trust might be created to provide legal protection for the assets of the trustor and to ensure that the assets are distributed properly. The trustee is charged with making sure that the wishes of the trustor are fulfilled.
A trustee is thus responsible for the proper management of all property and other assets owned by the trust for the benefit of a beneficiary. A trustee's specific duties are unique to the agreement of the trust and are dictated by the type of assets being held in trust. If, for example, a trust is comprised of various real estate properties, it will be the trustee's duty to oversee those pieces of land.
Trustees are also required to financially manage and oversee accounts within a trust when it is made up of other investments, such as equities in a brokerage account. Trustees usually have a fiduciary duty to the trust they oversee, which means they are required to put aside personal goals and initiatives to do what's best for the trust.
All trustees have general guidelines and responsibilities, regardless of the specificity of the trust agreement. All assets must be confirmed as safe and under the control of the trustee. This includes understanding the potentially unique terms of the trust and the desires of the beneficiaries.
Any investable assets have to be considered productive for the future benefit of the beneficiaries. Trustees must interpret and understand the trust agreement and be able to administer the distribution of any trust assets to the proper parties or beneficiaries.
For example, a trust might be established to provide money for education for the trustor's grandchildren. The trustee would be charged with honoring the specifics of the trust agreement, which might include the specific expenses that can be paid for with the trust money such as tuition and books. Trustees are also required to prepare any and all records on behalf of the trust, including financial statements and tax returns.
Trustees are expected to communicate with beneficiaries on a regular basis and keep them informed on the associated accounts and taxes.
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