Being asked by a loved one to serve as Trustee for their Trust upon their death can be quite an honor, but it’s also a significant responsibility—and the role is not for everyone. Indeed, serving as a Trustee entails a broad array of duties, and you are both ethically and legally required to execute those duties or face potential liability.
Before you say yes, be sure you understand what it means to be a Trustee.
In the end, your responsibility as a Trustee will vary greatly depending on the size of the estate, the type of assets covered by the Trust, the type of Trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the Trust you would be managing before deciding to serve.
And remember, you don’t have to take the job.
Yet, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might enjoy the opportunity to serve so long as you understand what’s expected.
To that end, this article offers a brief overview of what serving as a Trustee typically entails. If you are asked to serve as Trustee, feel free to contact us to support you in evaluating whether you can effectively carry out all the duties or if you should politely decline.
A Trustee’s Primary Responsibilities
Although every Trust is different, serving as a Trustee comes with a few core requirements: managing assets held in the name of the Trust, accounting for those assets, and following the terms of the Trust regarding distributions of income and/or principal to the beneficiaries of the Trust.
Remember, a Trust is simply an agreement between the grantor and the distribution of assets. The Trust agreement directs distribution to a Trustee to hold and manage the assets “inside the Trust” for the benefit of the beneficiaries.
As a Trustee, you will be acting as a “fiduciary,” meaning that you must act in the best interests of the beneficiaries of the Trust. And if you fail to abide by your duties as a fiduciary, you can face legal liability. For this reason, if you are named as Trustee, you should hire us to review the Trust Agreement and provide an analysis of the specific duties and responsibilities required of you before you agree to serve.
Regardless of the terms of the Trust or the assets it holds or will hold, some of your key responsibilities as Trustee include the following:
Identifying and gathering the Trust assets
Determining what the Trust’s terms require in terms of management and distribution of the assets
Hiring and overseeing an accounting firm to file income and estate taxes for the Trust
Communicating regularly with beneficiaries
Being scrupulously honest, highly organized, and keeping detailed records of all transactions
Closing the Trust when the Trust terms specify
No Experience Necessary
It’s important to point out that being a Trustee does NOT require you to be an expert in the 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, and the Trust estate will pay for you to hire these professionals.
So even though serving as a Trustee may seem daunting, you won’t have to handle the job alone. And you are also able to be paid to serve as a Trustee of a Trust.
That said, many Trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the Trust expenses, if that’s possible. But how you are compensated will depend on your personal circumstances, your relationship with the Trust’s creator and beneficiaries, and the nature of the assets in the Trust.
We Can Help
Because serving as a Trustee involves such serious responsibility, you should meet with us, Legatum Legal Oklahoma, as your Personal Family Lawyer®, to help decide whether to accept the role. We can offer you a clear, unbiased assessment of what's required of you based on the Trust’s terms, assets, and beneficiaries.
And if you choose to serve, it’s even more critical to have an experienced lawyer in estate planning to assist you with the Trust’s administration. As your Personal Family Lawyer®, we can guide you step-by-step throughout the entire process, ensuring you properly fulfill all of 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 Sarah M. Ventris, Personal Family Lawyer®. 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 Life & Legacy 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 Life & Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
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