What You Should Know Before Agreeing to Serve as Trustee

 


What You Should Know Before Agreeing to Serve as Trustee

by Amy Clemmons Brown, Esq.

 Being asked by a loved one to serve as trustee for their trust upon their death can be quite an honor, but it’s also a major responsibility—and the role is definitely not for everyone. Indeed, serving as a trustee entails a broad array of duties, and you are both ethically and legally required to properly execute those duties or face potential liability.

In the end, your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, the type of trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the trust you would be managing before making your decision to serve.

And remember, you don’t have to take the job.  

Yet, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might actually enjoy the opportunity to serve, so long as you understand what’s expected of you.

To that end, this article offers a brief overview of what serving as a trustee typically entails. If you are asked to serve as trustee, feel free to contact us to support you in evaluating whether you can effectively carry out all the duties or if you should politely decline.

A trustee’s primary responsibilities

Although every trust is different, serving as trustee comes with a few core requirements. These duties primarily involve accounting for, managing, and distributing the trust’s assets to its named beneficiaries as a fiduciary.

As a fiduciary, you have the power to act on behalf of the trust's creator and beneficiaries, always putting their interests above your own. Indeed, you have a legal obligation to act in a trustworthy and honest manner, while providing the highest standard of care in executing your duties.

This means that you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. And if you fail to abide by your duties as a fiduciary, you can face legal liability. For this reason, you should consult with us for a more in-depth explanation of the duties and responsibilities a specific trust will require of you before agreeing to serve.

Regardless of the type of trust or the assets it holds, some of your key responsibilities as trustee include:

●     Identifying and protecting the trust assets

●     Determining what the trust’s terms require in terms of management and distribution of the assets

●     Hiring and overseeing an accounting firm to file income and estate taxes for the trust

●     Communicating regularly with beneficiaries

●     Being scrupulously honest, highly organized, and keeping detailed records of all transactions

●     Closing the trust when the trust terms specify

No experience necessary

It’s important to point out that being a trustee does NOT require you to be an expert in law, finance, taxes, or any other field related to trust administration. In fact, trustees are not only allowed to seek outside support from professionals in these areas, they’re highly encouraged to do so, and the trust estate will pay for you to hire these professionals.

So even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. And you are also able to be paid to serve as trustee of a trust.

That said, many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses, if that’s possible. But how you are compensated will depend on your personal circumstances, your relationship with the trust’s creator and beneficiaries, as well as the nature of the assets in the trust. 

I can help

Because serving as a trustee involves such serious responsibility, you should meet with me, as your Personal Family Lawyer®, for help deciding whether or not to accept the role. I can offer you a clear, unbiased assessment of what's required of you based on the trust’s terms, assets, and beneficiaries.

And if you do choose to serve, it’s even more important that you have someone who can assist you with the trust’s administration. As your Personal Family Lawyer®, I can guide you step-by-step throughout the entire process, ensuring you properly fulfill all of the trust creator’s wishes without exposing the beneficiaries—or yourself—to any unnecessary risks. Contact me today to learn more.

This article is a service of Amy Clemmons Brown, an Arkansas-licensed Personal Family Lawyer®. We don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why I offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today at 501-376-9119 to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge!

Comments

Post a Comment

Popular posts from this blog

What Your Last Will & Testament Will (And Will Not) Do—Part 1

Image
What Your Last Will & Testament Will (And Will Not) Do—Part 1 by Attorney Amy Clemmons Brown, Esq.   August is “National Make-A-Will Month,” and if you have already prepared your will, congratulations—too few Americans have taken this key first step in the estate planning process. In fact, only 33% of Americans have created their will, according to Caring.com’s 2022 Wills and Estate Planning Study .  Yet, while having a will is important—and all adults over age 18 should have this document in place—for all but a few people, creating a will is just one small part of an effective estate plan that works to keep your loved ones out of court and out of conflict. With this in mind, here we look at exactly what having a will in place will—and will not—do for you and your loved ones in terms of estate planning. If you have yet to create your will, or you haven’t reviewed your existing will recently, contact me your Personal Family Lawyer® to get this vital first step in your estat...
Read more

3 Critical Considerations For How To Save For Your Child’s (or Grandchild's) College Education—Part 2

Image
3 Critical Considerations For How To Save For Your Child’s (or Grandchild's) College Education—Part 2 by Attorney Amy Clemmons Brown, Esq. If you have started to save for your child or grandchild’s college education, it’s worth considering whether to use a 529 plan, an education savings account, or an irrevocable trust.  Last week, we discussed 529 plans and education savings accounts, which are both popular options for saving for college education. One of the main reasons for their popularity is their tax-saving advantages. The money you contribute to a 529 account grows on a tax- deferred basis, and withdrawals are tax-free , provided they are used for qualified education expenses, such as tuition, room and board, and other education-related fees. That said, one of the downsides of 529 plans is that they come with strict limits on how you can use the funds (for education-related expenses only), and they also have a limited range of options for how you can invest your funds, pri...
Read more

How Estate Planning Can Reduce The High Cost Of Dying—Part 2

Image
How Estate Planning Can Reduce The High Cost Of Dying—Part 2 by Amy Clemmons Brown, Esq. Despite the fact that it happens to every single one of us and is as every bit as natural as birth, very few among us are properly prepared for death—whether our own death or the death of a loved one.  Yet the pandemic might be changing this. According to Census figures, the pandemic caused the U.S. death rate to spike by nearly 20% between 2019 and 2020 , the largest increase in American mortality in 100 years. More than two years and 1 million deaths later, it's more clear than ever that death is not only ever-present, but a central and inevitable part of all our lives. Yet, some in the end-of-life industry believe the pandemic’s massive loss of life has also created an opportunity to transform the way we face death, grief, and all of the other issues that arise when we lose someone we love dearly. In fact, this sentiment is the mission of the new startup Empathy, an AI-based platform designe...
Read more