You have just found out that you have been named as a Trustee – what are your duties, and what do you do now?
As trustee, you will have fiduciary duties to carry out the terms of the trust. A fiduciary is a person who is responsible for taking care of something that belongs to someone else. Under the law, fiduciaries owe certain duties to the people on whose behalf they handle property. In this case, you will owe duties to the beneficiaries of the trust.
Your first duty is to read the trust agreement and administer the trust according to its instructions. In carrying out the terms of the trust, you will have fundamental duties. These duties include:
1. Carrying out the terms of the trust
Review the trust documents and make sure you understand them. If the documents state you must give $1,000 to Jimmy when he turns 21, then you are to make sure that this happens.
2. Acting with prudence
Your standard of care in dealing with the trust property should be one of a “reasonable person.”
3. Acting with loyalty
If there is a conflict between yourself and the interest of the trust, you must do what would benefit the beneficiaries rather than yourself.
4. Providing an accounting
You must make sure each beneficiary is informed of their interest in the trust, and keep proper records.
5. Keeping trust property and your property separate.
You must not co-mingle trust property with your own. Make sure the trust has separate accounts set up.
6. Getting assistance when necessary
While the trustee duties are your responsibility, you are able to get assistance from professionals when it comes to legal or accounting issues.
7. Preserving trust assets
The trust property is under your control, and you should take steps to preserve these assets for the beneficiaries. For example – if the trust property is a house, purchase insurance for it.
A trustee has extensive duties and responsibilities, and if you need assistance with understanding or interpreting the terms of a trust, you do have the option of consulting with a trust attorney.