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Being asked by a loved one to serve as Trustee for their Trust upon their death can be quite an honor, but it’s also a significant responsibility—and the role isn’t for everyone. Indeed, serving as a Trustee entails a broad array of duties, and you’re both ethically and legally required to execute those duties or face potential liability.

Before you say yes, be sure you understand what it means to be a Trustee.

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, the type of 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 deciding to serve.

And remember, you don’t have to take the job.

Yet, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might enjoy the opportunity to serve so long as you understand what’s expected.

To that end, this article offers a brief overview of what serving as a Trustee typically entails. If you’re asked to serve as Trustee, feel free to contact us to support you in evaluating whether you can effectively carry out all the duties or if you should politely decline.

A Trustee’s Primary Responsibilities

Although every Trust is different, serving as a Trustee comes with a few core requirements: managing assets held in the name of the Trust, accounting for those assets, and following the terms of the Trust regarding distributions of income and/or principal to the beneficiaries of the Trust. 

Remember, a Trust is simply an agreement between the grantor and the distribution of assets. The Trust agreement directs distribution to a Trustee to hold and manage the assets “inside the Trust” for the benefit of the beneficiaries.

As a Trustee, you’ll be acting as a “fiduciary,” meaning you must act in the best interests of the beneficiaries of the Trust. And if you fail to abide by your duties as a fiduciary, you can face legal liability. For this reason, if you’re named as Trustee, you should hire us to review the Trust Agreement and provide an analysis of the specific duties and responsibilities required of you before you agree to serve. 

Regardless of the terms of the Trust or the assets it holds or will hold, some of your key responsibilities as Trustee include the following:

  • Identifying and gathering 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
  • Being scrupulously honest, highly organized, and keeping detailed records of all transactions
  • Closing the Trust when the Trust terms specify

No Experience Necessary

It’s important to point out that being a Trustee does NOT require you to be an expert in the law, finance, taxes, or any other field related to Trust administration. Trustees aren’t 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 these professionals.

So even though serving as a Trustee may seem daunting, you won’t have to handle the job alone. And you’re also able to be paid to serve as a Trustee of a Trust.

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. But how you’re compensated will depend on your personal circumstances, your relationship with the Trust’s creator and beneficiaries, and the nature of the assets in the Trust.

We Can Help

Because serving as a Trustee involves such serious responsibility, you should meet with us to help decide whether to accept the role. We can offer you a clear, unbiased assessment of what’s required of you based on the Trust’s terms, assets, and beneficiaries.

And if you choose to serve, it’s even more critical to have an experienced lawyer in estate planning to assist you with the Trust’s administration. We can guide you step-by-step throughout the entire process, ensuring you properly fulfill all of the Trust creator’s wishes without exposing the beneficiaries—or yourself—to any unnecessary risks. Contact us today to learn more.

This article is a service of Brittany Cohen, Personal Family Lawyer. 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’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

[email protected]

858-427-0539

You’ve probably heard you need a trust to keep your family out of court and maybe out of conflict in the event of your death or incapacity. And, if you haven’t, you’re hearing it now. If you own any “probatable” assets in your name at the time of your incapacity or death, your family must go to court to access them. If you aren’t sure if your assets are “probatable,” contact us to discuss.

But you may need clarification about whether you need a revocable living or irrevocable trust. More and more, we’re seeing people come our way asking for a irrevocable trust, and so this article is designed to help you learn the difference and then get into an “eyes wide open” conversation about the right kind of trust for you and your loved ones.

What Is A Trust?

A trust is an agreement between the grantor of the trust (that’s you) with a trustee (someone named by you) to hold title to assets for the benefit of your beneficiaries (whoever you name). When we break it down in its simplest form, it’s that straightforward. It’s an agreement.

Now, the terms of that “agreement,” called a “trust agreement,” can vary significantly, and that’s where we come in, as we’ll work with you to clarify the terms that you want between yourself and the trustee for the benefit of the people you name as beneficiaries.

With a revocable living trust (RLT), during your lifetime, you’ll be the “grantor,” the “trustee,” and the “beneficiary.” So, for all intents and purposes under the law, nothing really happens when you retitle your assets in the name of your RLT, so long as you’re living and have the capacity (meaning you can make decisions for yourself).

With an RLT, once you become incapacitated (which is determined as per the instructions in the trust document) or in the event of your death, the trust becomes irrevocable, and the person or persons you’ve named as successor trustee steps in to control the assets held in the name of the trust for the benefit of the beneficiaries named in the trust. If you’re still living but incapacitated, you would be the beneficiary still. If you’ve died, then your named heirs would be the beneficiaries. At that point, the trust may distribute outright to your beneficiaries or be held in continuing trust — protected from creditors, future divorces, future lawsuits, and even estate taxes (if the trust is drafted properly) — if your trust terms provide for continuing protection.

You could indicate in the trust agreement that you want your beneficiaries to “control the trust” but that you want the trustee to continue to hold title to the assets, thereby protecting the assets, while giving the beneficiaries nearly full control and use of the assets. This is a bit tricky, so don’t try it at home without support. But, if you want to provide this kind of benefit and protection to the people you love, be sure to talk with us about building a Lifetime Asset Protection Trust into your plan. It’s highly worth it if you’ll pass on anything more than what your children will immediately spend upon your death.

We support you in making these decisions in our Family Wealth Planning Session process before ever drafting a single legal document for you. But before we talk about that, let’s clarify what a irrevocable trust is and where it might fit into your plan.

A irrevocable trust is the same as a revocable trust — an agreement between a grantor and a trustee to hold the property for a beneficiary. Still, if the trust agreement is irrevocable, or once it becomes irrevocable, it cannot be changed. There are some exceptions to this, but for the most part, that’s the case. If you put your assets into a irrevocable trust, you cannot then take them out of the trust and return them to yourself because the gift to the trustee to hold the assets for the beneficiary is irrevocable.

A irrevocable trust can remove assets from your name and protect them from future lawsuits or future growth in your estate, which removes them from your estate for estate tax purposes. We’ll recommend irrevocable trusts when we’re preparing your estate for the potentiality that you may need long-term nursing care that you would like covered by Medicaid (or Medi-Cal) without decimating your family’s inheritance, or on the other end of the spectrum, if you have an estate that could be subject to the estate tax or that could be at significant risk of lawsuits.

When you meet with us for a Family Wealth Planning Session, we’ll look at your assets, family dynamics, personal desires, and how the law will apply to all of it. Then, together, we’ll decide on the right plan for you — whether to include a trust or not, whether that trust should be revocable or not, and if it is revocable, when it should be irrevocable, and how long it should last for the people you love.

Never choose a type of trust without working with a lawyer who understands you, your family, your assets, and your goals. Never use a life insurance professional or financial advisor to choose the type of trust or draft your trust for you. Too many variables could leave your family with a big mess. We’ll guide you to make the right decisions during life and be there for your family when you can’t be. And we’ll integrate the proper insurance, financial, and tax professionals into your planning at the right time to ensure everything we create works for you and the people you love.

When you meet with us, we’ll learn about you, your family dynamics, your assets, your risks and liabilities, and your needs and desires to support you in the empowering decision-making process of creating an estate plan that works for you and the people you love. Contact us today to get started.

This article is a service of Brittany Cohen, Personal Family Lawyer. 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’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

[email protected]

858-427-0539