When your loved one tells you they have listed you as a Trustee or Successor Trustee over their trust, you nod, appreciate the trust they have in you, and move on to the next train of thought. However, when you have to take action in this role, only one thought comes to mind: what on earth am I supposed to do?
Successor Trustees, let’s start with the good news. You can relax! Your responsibilities start when the grantor, your loved one who nominated you to serve, becomes unable to manage their own affairs, in cases of incapacity or death.
On the other hand, Trustees, your responsibilities have already begun! Your job is to manage the assets within the trust itself. The most important thing to remember, as the Trustee of someone else’s trust, these are not your assets! You are simply protecting them for the grantor, if he or she is still living, and for the beneficiaries, who receive a portion of the grantor’s assets once he or she has passed away. The trust document itself contains instructions for the grantor’s wishes of their estate and their beloved assets; this means you have to follow them!
If the grantor is alive, but incapacitated, your responsibilities as a Trustee primarily consist of the following: notifying and working with their attorney, banks, or others who aid in managing their assets and acting appropriately to preserve and protect those assets; making distributions to the Grantor as well as their spouse and dependent children; maintaining accurate records and providing an annual accounting to the Trust beneficiaries; and dealing with any other personal or business affairs related to the Grantor or the Trust terms.
If the grantor has passed away, your responsibilities as a Trustee consist of the following: obtaining a new tax identification number for the trust and establishing a trust bank account; maintaining contact with the attorney to make sure you properly administer the Trust; creating an inventory and valuation of the trust assets; working with the decedent’s Executor with respect to the administration of the estate; paying any trust related bills; keeping the beneficiaries informed if appropriate or required and making distributions to the Trust beneficiaries according to the trust terms; maintaining excellent financial records and providing an annual accounting to the Trust beneficiaries; filing annual tax returns for the trust; and wrapping up the trust after all distributions have been made.
Click here for more information about the duties and responsibilities of a trustee.