A trust is a separate lawful entity that can own assets. The document can look a lot like a will. With a trust, all the assets are transferred to the trust and not under a person’s name. When the trust owner dies or is incapacitated, all assets are distributed according to the trust directions. Doing it this way will avoid probate, or court involvement, at the death of a loved one.
The person who distributes the assets and takes care of the deceased's affairs is called the trustee. Often the owner of the trust, or grantor, is the trustee until he or she dies. Married couples are often co-trustees. And then there can be a successor trustee who takes over after the grantor(s) of the trust have passed away. Here are the responsibilities of a trustee:
1. Follow the instructions on the trust document. A trust can include precise instructions, and it is your responsibility to follow them exactly to uphold the integrity of the form.
2. Do not mix your assets with those of the trust. You cannot legally combine your assets with those of the trust when it comes to investing or any other point of interest.
3. Do not favor one beneficiary over the other unless explicitly stated in the trust document. Your duty as a trustee includes removing any personal feelings involved. You must respect the grantor’s wishes.
4. Trust assets can be invested but in a conservative, low-risk manner. If you are holding assets to be turned over to beneficiaries at a certain age, you can invest and grow the money. Choose to invest in companies that will deliver moderate growth with minimal risk.
5. Keep detailed accounts, file taxes, and communicate clearly with the beneficiaries. As the trustee, you must keep thorough documentation of every move you make with the money and assets left in your confidence.
This list provides a summary of what is expected of a trustee. Do not hesitate to contact a professional if you want to be sure to uphold your role correctly. It is important not to take the job of a trustee lightly.
Our team at Miles & Hatcher, LLP, is here to answer any question you may have regarding a trust or trustee. You do not have to do all of this on your own. A professional can help with the accounting and finance side of the trust. Please call to schedule a free consultation: (909) 481-4080.