Have you ever been asked to serve as a trustee? If you have or may be asked in the future, you should be aware of the duties of a trustee. The Merriam-Webster Dictionary definition of a trustee is: a natural or legal person to whom property is legally committed to be administered for the benefit of a beneficiary, or one to whom something is entrusted.
Serving in a trustee role carries responsibilities to perform the provisions laid out in the trust documents. Often, when serving as a trustee, you are in this role to carry out the wishes and desires of the decedent who created the trust. They should have specified in the trust document how to carry out their wishes and when distributions to beneficiaries may or should be made. However, there may be more duties and responsibilities than just finalizing and disbursing all the funds. Some trusts are designed to go on for many years.
The duties of a trustee vary depending on the powers provided for in the trust agreement. The type of trust, its purpose, and particular nuances of the trust can also affect a trustee’s role in managing the trust assets and dealing with beneficiaries. Generally, it is the trustee’s duty to manage the trust property as a prudent person would manage someone else’s property, and to distribute the assets according to the terms of the trust. Trustees are held to a high standard of performance in administering the trust and a trustee must exercise reasonable care, skill, and caution in managing trust assets.
When serving as a trustee, the trustee should review the trust carefully to ensure a clear and complete understanding of the provisions within the document. A trustee will also have duties to give proper notice of the trust to its beneficiaries, co-trustees, successor trustees or other persons named within the trust. The trust should outline these duties to give notice and when proper notice needs to be provided.
A trustee must also keep beneficiaries informed of the various activities of the trust, including the trust’s current investments, investment performance, and other information regarding the administration of the assets. Most state laws require the trustee to provide a current accounting of the trust assets, liabilities, receipts, and disbursements to the trust beneficiaries at least annually.
A trustee may not act in any manner that puts their personal interests or that of a third party ahead of the trust beneficiaries. The trustee’s loyalty should be to all the beneficiaries and not to a particular individual or group (unless otherwise provided for in the trust).
An item of utmost importance is confidentiality. The trustee should keep trust matters confidential unless otherwise required by the trust or by law. The trustee should ensure that any information about the beneficiaries is kept confidential.
If you have been asked to serve as a trustee, I recommend you do not take this responsibility lightly and ask to read the trust document before accepting this position. You will need to make sure you will be able to carry out the terms of the trust when the time comes for you to step into the trustee role.