So You Are a Trustee

Your parent, aunt, grandparent, or friend has appointed you as trustee of their trust. You may have briefly glanced at the document 10 years ago when the trust was formed and never gave it a second thought until you get the call that the trust creator has become incapacitated or has died.

What do you do? What are your duties as trustee? What information are you supposed to give the beneficiaries? What are the steps to collecting assets? What bills do you pay? Are you supposed to file tax returns?

Serving as a trustee can quickly become overwhelming. Timing issues regarding notice to the beneficiaries and reporting to the beneficiaries your activities are often the most difficult for a trustee to know without the help of legal counsel. An accountant and financial advisor can also be valuable resources during the initial trust administration period.

Whether you are currently serving as trustee or know you will be serving as trustee in the near future, a consultation regarding your legal responsibilities as trustee is critical.

The duties of a trustee may include:

1. Notice to the beneficiaries of the trust. Notification may be necessary to beneficiaries that you are serving as trustee, and to inform them that they have a right to contest the terms of the trust. Each state differs in how the wording must be stated in the notice and what steps must be taken in order to provide appropriate notice. Some states require that a copy of the trust be provided to the beneficiaries, while others do not.
2. Collection of the assets. Many assets may not currently be titled in the name of the trust. Some assets may list the trust as the payable on death beneficiary while other assets may need to be probated in order to transfer those into the name of the trust.
3. Proper accounting. As trustee, you will be responsible for accounting for the assets in the trust. Most states require that the beneficiaries be sent an annual report regarding transactions that occurred.
4. Taxes. You will be responsible for filing taxes both for the trust and for the decedent.

This is not an exhaustive list of all the duties of a trustee. Being a trustee can be time-consuming and overwhelming, but with the right team of professionals, the burden can be lighter.