If you are in the position where a friend or family member asks you to be the trustee of their will, what does that mean? And what responsibilities come with that assignment? Will you be liable if you do not administer the trust correctly? These questions are valid and vital to find the answers before agreeing to be a trustee.
What Is a Trustee?
A trustee is a person that is in charge of a trust. You will be responsible for making decisions based upon the intent of the trust, including whether a beneficiary is qualified to receive money at a specific time. It can be a sensitive position to take on, especially if you are dealing with family members and pressure from beneficiaries.
Here are some responsibilities of a trustee:
· Distribute funds to beneficiaries.
· Make investments as directed.
· Pay taxes on the assets in the trust.
· Hold assets until the time comes when a beneficiary is eligible.
· Determine if someone is of a sound mind and meets the requirements to receive an inheritance.
· Make discretionary decisions if the rules of the trust are arbitrary, like giving additional funds if necessary.
· Keep detailed records and financial statements.
· Show reports and documentation to beneficiaries when requested.
When you take on the responsibility of a trustee, it is up to you to administer the funds and assets while keeping detailed records so that you can prove everything is done correctly. You will be held liable if taxes are done wrong or money is missing that is not documented. This great responsibility can sometimes be more suitable for a lawyer that is removed from personal relationships with the family. A lawyer will also be familiar with the inner workings of a trust and know how to keep adequate documentation.
If you are unsure who to appoint as your trustee or would like to learn more, Miles & Hatcher, LLP can help. The more information you have, the more likely you can set up a trust that will honor your name and take care of your assets. Make an appointment to learn more: (909) 481-4080.