Whether it’s an honor or a burden (or both), you have been appointed trustee of a trust. What responsibilities have been thrust upon you? How can you successfully carry them out?
Here are nine do’s and one don’t to get you started:
- Do read the trust document. It sets out the rules under which you will operate, so you need to understand it completely.
- Do create a checking account for the trust. All income and expenses should go through this account. While you can and should invest the money, a checking account will enable you to make distributions and payments and keep track of them.
- Do keep the best interests of the beneficiaries in mind at all times. You have what’s called a “fiduciary” duty to them, which is an extremely high standard.
- Don’t have any personal financial dealings with the trust. For instance, you cannot borrow money from the trust or lend the trust money to anyone.
- Do provide the beneficiaries and anyone else indicated in the trust with an annual account of trust activity. This can be a copy of the checking and investment account statements or a more formal trust account prepared by an accountant or attorney.
- Do invest the trust funds prudently and productively. You cannot simply leave the trust funds in a savings account. And you can’t put them all into a promising new company. You need to diversify the trust portfolio among stocks and fixed income securities. It is wise to get professional investment advice.
- Do keep in regular contact with the beneficiaries to understand their needs.
- Do be aware of any public benefits the beneficiaries may be receiving and make sure you do not jeopardize the beneficiaries’ eligibility.
- Do file annual income tax returns for the trust.
- Don’t fly solo. Get professional advice to make sure you are correctly fulfilling your role.
For assistance with your responsibilities as a trustee, contact a certified elder law attorney, such as Linda Strohschein and her team at Strohschein Law Group. To set up an appointment, contact Strohschein Law Group at 630-377-3241.