What Are the Duties of a Trustee?
A Trustee is the legal name for a person or entity designated in a Will or trust document to hold legal title to the trust property and to administer it for the benefit of the trust beneficiaries according to the specified purposes of the document. In revocable trust documents, it is customary for the person establishing the trust (known as the “Grantor”) to act as the Trustee of the trust and also to be the sole beneficiary of the trust for his lifetime. However, it is also permissible for the Grantor to designate some other person or entity to serve as a Trustee.
In a Last Will and Testament, a Trustee will typically be designated for trusts established in the Will for the benefit of minor or disabled beneficiaries. Of course, trusts designated in Wills do not come into existence until the death of the person who executed the Will. As a result, although the Trustee is designated in the Will, he may not take on his fiduciary duties until the trust is funded many years later (when the Will is admitted for probate following the person’s death).
A Trustee acts in a fiduciary capacity and is obligated to act in accordance with the specific terms of the trust document. A trustee has an obligation to maintain, preserve and protect the trust assets and to remain impartial to all of the trust beneficiaries.
Typically, in estate planning documents in which trusts are created, there is a designation of a primary Trustee and a successor Trustee, and sometime a second successor Trustee. As mentioned previously, trustees can be individuals as well as professionals, such as accountants and lawyers, and there are also trust companies within financial institutions that serve as a Trustee.
By law, a Trustee is required to account for each financial transaction associated with his Trusteeship on an annual basis. In certain instances, such accountings are required to be filed with the local courts in addition to being provided to the beneficiary/ies of the trust.
Simply because you are named in a document to serve as Trustee does not mean that you are required to do so. If an individual is named in a document but does not desire to serve, he has the right to decline the appointment, which is usually accomplished by signing a written declination to that effect.
In sum, a Trustee has many important responsibilities to the person establishing the trust, to the management of trust assets, and to the beneficiaries of the trust. Like the title suggests, a Trustee should be someone in whom you have a great amount of trust to carry out your intentions of the estate plan.