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3 responsibilities a trustee must generally fulfill

On Behalf of | May 30, 2023 | ESTATE ADMINISTRATION

When someone creates a trust, they may devote a significant amount of time to the selection of their trustee. They need to choose someone who is responsible and trustworthy, as well as someone who is capable of fulfilling their responsibilities for many years or until the trust serves its purpose.

Trust administration can be complex. It may require financial and organizational skills as well as excellent people skills, as individuals will need to communicate with beneficiaries and many others on behalf of the trust. The responsibilities of a trustee may extend beyond what some people can handle, and, therefore, it is crucial for both those creating trusts and those contemplating acceptance of a trustee role to understand what those responsibilities entail.

Managing trust assets

Maybe the trust holds ownership of real property, or perhaps there are financial resources. A trustee may need to perform physical maintenance and upkeep on certain assets, or it may be their responsibility to decide how to invest and when to liquidate certain assets. The trustee has a fiduciary duty to the beneficiaries of the trust and should therefore seek to preserve, if not increase, the holdings of the trust.

Complying with trust instructions

The person who created the trust may have put specific limitations on the distribution of assets from the trust, or they may have required that the trust covers certain expenses for beneficiaries, such as educational costs. Trustees have to adhere to those rules, which might include refusing to distribute assets in some cases and other times might involve distributing assets as requested even if the trustee has personal reservations about the matter.

Handling legal and tax matters

A trustee is responsible for representing the trust in court when necessary and also for handling its financial matters. In some scenarios, a trustee may need to report income and file tax returns, such as when the trust invests resources and earns a return on those investments.

It takes planning, financial management skills and proper organization to administer a trust. Recognizing that not everyone can fulfill the duties of a trustee may benefit those establishing a trust or contemplating serving as a trustee.