A trust is a legal entity that allows a person’s assets to be held safely on behalf of that person’s beneficiaries. Trusts are increasingly being used in estate planning because they help to control and protect a person’s wealth, and they can avoid probate and associated fees and taxes. There are numerous types of trusts, each with individual purposes geared towards achieving specific estate planning goals. Some of the most common types of trusts include:
- Revocable Living Trust
- Irrevocable Living Trust
- Retirement Benefit Trusts
- Special Needs Trust
- Asset and Divorce Protection Trust
With a trust comes a trustee. A trustee is essentially the person given control over the trust with the purpose of administering the assets according to the specified terms and instructions. It is important to note that a trustee does not own the assets of a trust. Essentially, a trustee manages and administers the property within the trust on behalf of the grantor and the beneficiaries it is intended for after the grantor dies. The trustee:
Responsibilities and duties of a trustee include:
- Following the specific instructions included in the trust documents.
- Keeping accurate records of the trust’s assets/property
- Filing necessary tax returns
- Reporting to beneficiaries as required by the trust
- Treating beneficiaries the same, unless instructed otherwise
- Investing trust assets in a manner that results in growth with little risk
You are required to perform the specified duties with care and good faith. As a trustee, you cannot:
- Mix assets of a trust with your own; you must keep accounts separate
- Use assets of the trust for your own benefit, unless instructed otherwise
- Disregard the interests of the beneficiaries and act in your own self-interest
- Fraudulently misappropriate assets of the trust
- Improperly handle financial matters
- Fail to comply with laws or regulation pertaining to the trust or estate
Seeking Legal Help
The job of a trustee can seem overwhelming. Fortunately, most trusts are created with the help of an experienced attorney and include clear and specific instruction. In addition, you do not have to this job all by yourself. In fact, it is advised to hire professional help for accounting and finance purposes. It is especially beneficial to consult with an experienced estate planning attorney, like a trust attorney O’Fallon MO can rely on. They can help you navigate the legal aspects of the process and offer proper guidance in handling certain matters.
Thanks to our friends and contributors from Legacy Law Center for their insight into trusts and trustee responsibilities.