If someone asks you to be the trustee of their trust, should you do it?
Well, as is so often the answer in law, it all depends.
One thing is certain, however, and that is that before you say yes, you should fully understand what you would be agreeing to.
So let’s take a look at some of the things you should know about being a trustee.
A Trustee is a Fiduciary.
The first thing you need to understand is that a trustee is a fiduciary—and what that means.
A fiduciary owes a duty of utmost care and loyalty to the beneficiary. The trustee’s duty of loyalty means that the trustee must put the needs of the beneficiary/ies above his or her own self-interest. It is important to understand that if you are the trustee of a trust, you must manage and use the trust assets for the benefit of the beneficiary —not for yourself. A fiduciary cannot engage in self-dealing and may not exploit the fiduciary relationship for his or her own benefit.
The duty of care requires a fiduciary to carry out all of his/her responsibilities in a prudent and informed manner.
As a fiduciary, you will be held to a very high standard. You will be required to pay even more attention to the trust investments and disbursements than you would to your own accounts.
What are the Responsibilities of a Trustee?
Your duties as a trustee will be governed by the trust documents.
However, broadly speaking, as a trustee, some of your responsibilities will be to:
- Follow the instructions in the trust document.
- Treat all beneficiaries impartially.
- Protect and invest all trust assets prudently and in a manner that will result in reasonable growth with minimal risk.
- Make distributions as required by the trust documents.
- Keep accurate records and provide an accounting.
- File tax returns.
- Report to the beneficiaries as required in the trust document.
These are by no means the only (or all of the) duties of a trustee, but it should give you a good idea of what is involved.
Trustees are allowed to charge a reasonable fee. To determine what is “reasonable” in this context, it is best to consult with experienced and knowledgeable trusts and estates counsel.
Have Questions? We Have Answers.
If you would like to know more about what is involved in being a trustee or in choosing a trustee for your trust, call us at 928-282-1483. We offer FREE consultations. We have offices in Sedona, Arizona and we serve all of Arizona. E-mail us or connect with us on Facebook , Twitter or LinkedIn.