Trust Law 101: What do I do if I am Named a Trustee of a Trust?

Yee Law Group Inc. > Trust Law 101: What do I do if I am Named a Trustee of a Trust?

Trusts are becoming more and more prevalent in Estate Planning. There are many types of trusts, all of which are used to achieve different estate or asset planning goals. These include, but are not limited to Revocable Living Trusts, Irrevocable Living Trusts, Asset and Divorce Protection Trusts, Gift Trusts, Retirement Benefit Trusts, and Special Needs Trusts.

People who are involved in dangerous jobs, like construction, may be considering making a trust as a way to ensure control of their assets should an accident happen. A construction accident lawyer Memphis, TN relies on for help can aid in making those decisions. As a result of the rise in popularity of the use of Trusts, more and more people are finding themselves being designated as Trustees.  What is a Trustee of a Trust? The Trustee is the person who is tasked with carrying out the terms of the Trust and protecting and managing the Trust assets.

The most important thing to remember when you step into the role of Trustee is that the Trust assets are not your assets.  Rather, you are safeguarding them for someone else or for a group of other people (i.e., the Grantor (if living) and for the Beneficiaries, who will receive the assets after the Grantor dies).

As a Trustee, you have certain responsibilities.  For example:

  • You must follow the instructions in the trust document.
  • You cannot mix trust assets with your own. You must keep separate checking accounts and investments.
  • You cannot use trust assets for your own benefit (unless the trust authorizes it).
  • You must treat trust Beneficiaries the same; you cannot favor one over another (unless the trust says you can).
  • Trust assets must be invested in a prudent (conservative) manner, in a way that will result in reasonable growth with minimum risk.
  • You are responsible for keeping accurate records, filing tax returns, and reporting to the Beneficiaries as the trust requires.

A Trustee is legally required to act in good faith and perform the duties of the position with care and due diligence. If you’ve been appointed a Trustee, then you are a fiduciary and you must act in the best interest of the trust Beneficiaries. Some examples of failing to fulfill the fiduciary duties could include:

  • Acting in your own self-interest while disregarding the Beneficiaries’ interests;
  • Fraudulently misappropriating money or assets from the trust;
  • Failing to take action or respond to Beneficiaries’ requests;
  • Improper recording of accounting or other financial matters; or
  • Failing to comply with laws and regulations regarding the administration of the trust or estate.

As a wills and trusts attorney Memphis, TN routinely relies on, we recommend that you engage the appropriate professionals to help you carry out your responsibilities as Trustee, especially with accounting and investing.  You will also probably need to consult with an experienced trust attorney from time to time.  However, as Trustee, you are ultimately responsible to the beneficiaries for prudent management of the trust assets.

Please contact us if you need assistance in serving in the role of Trustee or if you have any related questions.

Thanks to our friends and contributors at Patterson Bray PLLC for their insight into wills and trusts.