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What You Need to Know About Your Trustee Duties

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There are a number of reasons why families establish trusts as part of their estate plans, including minimizing taxes, avoiding probate, and transferring wealth in a systematic fashion from one generation to the next. So it’s not surprising that a recent Caring.com survey found that at least six in 10 Americans age 53 or older have a living trust or a will, a figure that is likely higher with affluent families. This means there’s a likely chance you’ll have to name a trustee for a trust you establish or that you’ll be named a trustee by someone you know. Families sometimes select relatives or close friends whom they consider reliable and whose judgment they respect, but being a trustee can be a very demanding job.

What does it entail? A trustee serves as the legal owner of all of a trust’s property, investments, and capital, and is responsible for managing the assets in an appropriate manner. In effect, this person is often the quarterback when it comes to executing an estate plan. And whether you are overseeing a trust with tens of millions of dollars in assets or one with far less value, the role can impose significant responsibilities. Among them: being knowledgeable about income tax and transfer tax laws; properly managing distributions from the trust to beneficiaries; prudently investing on behalf of the beneficiaries; handling administrative duties; and preparing and filing all necessary tax documents. For more information, visit fidtrustco.com/duties.

3 Tips for Fulfilling Trustee Duties

1. Understand your responsibilities. You need to understand duties of loyalty, as well as duties of impartiality in accordance with the trust terms.

2. Seek outside help. You can outsource specific functions, such as investment management and filing taxes, to qualified professionals.

3. Maintain meticulous records. Accurately accounting for distributions and payments is critical. Something as simple as reimbursing yourself for trust expenses paid on a personal card can create the appearance of self-dealing, if not properly documented.

Stacy K. Mullaney ([email protected]) is a trust and estate attorney and the Chief Fiduciary Officer at Fiduciary Trust Company, a 130-year old private wealth management firm focused on individuals and nonprofits seeking objective expertise to grow and protect their investments. Mullaney oversees FTC’s in-house team of trust and estates attorneys, paralegals, and estate tax professionals.