If a family member or friend has asked you to serve as trustee for their trust either during their life, or upon their death, it’s a big honor—this means they consider you among the most honest, reliable, and responsible people they know.
That said, serving as a trustee is not only a great honor, it’s also a major responsibility, and the role is definitely not for everyone. Serving as a trustee entails a broad array of duties, and you are both ethically and legally required to properly execute those duties or you could face liability for not doing so.
In the end, your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the trust you would be managing before making your decision to serve.
Remember, you don’t have to take the job. That said, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might actually enjoy the opportunity to serve, so long as you understand what’s expected of you.
With this in mind, here we’ll give you a brief overview of what serving as a trustee typically entails.
A Trustee’s Primary Duties
Although every trust is different, serving as trustee comes with a few core requirements. These duties primarily involve accounting for, managing, and distributing the trust’s assets to its named beneficiaries as a fiduciary.
As a fiduciary, you have the power to act on behalf of the trust’s creator and beneficiaries, always putting their interests above your own. In fact, you have a legal obligation to act in a trustworthy and honest manner, while providing the highest standard of care in executing your duties.
This means that you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. And if you fail to abide by your duties as a fiduciary, you could face legal liability.
But regardless of the trust or the assets it holds, some of your key responsibilities as trustee include:
Identifying and protecting the trust assets
Determining what the trust’s terms require in terms of management and distribution of the assets
Hiring and overseeing an accounting firm to file income and estate taxes for the trust
Communicating regularly with beneficiaries
Bringing in the right investment management team to manage the trust assets
Being scrupulously honest, highly organized, and keeping detailed records of all transactions
Closing the trust and distributing the assets when the trust terms specify
Experience NOT Required
It’s important to point out that being a trustee does NOT require you to be an expert in law, finance, taxes, or any other field related to trust administration. In fact, trustees are not only allowed to seek outside support from professionals in these areas, but they’re also highly encouraged to do so, and the trust estate will pay for you to hire the support you need.
So even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. And you are also able to be paid to serve as trustee of a trust should you choose to accept the role.
That said, many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses, if that’s possible. The way you are compensated as a trustee will depend on your personal circumstances, your relationship with the trust creator and beneficiaries, as well as the nature of the assets in the trust.
This article is a service of the Law Office of Keoni Souza, LLC, an estate planning law firm in Honolulu, Hawaii. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That is why we offer a strategic planning session, during which you will get more financially organized than you have ever been before and make all the best choices for the people you love. You can begin by contacting our office today to schedule a planning session and mention this article to find out how to get this $750 session at no charge. Disclaimer: All information on this website is for informational purposes only and is not legal advice. You should contact an attorney trained to work with families on estate planning matters regarding your specific situation. Use of and access to this website or any of the email links contained within the site do not create an attorney-client relationship between the Law Office of Keoni Souza, LLC, and any users or any other party.