As a trustee, you play a vital role in the administration of a trust. Trust administration can be complex and time-sensitive, requiring a great deal of attention to detail and a thorough understanding of the trust. It’s important to be fully committed to staying on top of the administration process to make sure that all of your obligations and duties are being fulfilled as outlined within the trust. It can be a daunting task, but there are practical steps you can take to make the process run smoothly.
Understanding Your Responsibilities
A trust doesn’t spring into action on its own. Before accepting a role as trustee, it’s essential to fully understand the duties and time commitments required. As a fiduciary, you have not only a responsibility but a legal obligation to act in the best interest of the beneficiaries of the trust. This can include managing the assets of the trust, making distributions, and maintaining accurate records. Utilizing the legal expertise of an estate planning attorney can help you interpret the terms of the trust and your responsibilities as a trustee.
Keeping Accurate Records
Staying organized is an important skill for anyone, but especially for a trustee. Maintaining accurate and extensive records of all income, expenses, and distributions or the trust is essential. Records should include details like transaction receipts, dates, dollar amounts, and any notes that may provide context for transactions. These records will not only help you with your duties as a trustee, but it can also protect you from potential liabilities in the event of a dispute.
Communication is Key
Although the beneficiaries are not involved with the administrative side of the trust, they should be kept in the loop about their assets. Having detailed records will also allow you to give reports on the trust and communicate any major developments as necessary. Transparency will help to prevent misunderstandings and potential disputes. If all the cards are laid out on the table, beneficiaries will not have to worry about the status of their assets.
Just like any contract, a trust has legal repercussions for failing to follow through on the terms. As a trustee, if your actions or negligence causes any losses suffered by the beneficiaries, you could be held personally liable. Depending on the severity of the mismanagement, it could be considered a breach of fiduciary duty and you could be sued by the beneficiaries or removed as a trustee. In some cases, you could also be ordered to pay damages.
As you can see, being a trustee is a huge responsibility, but you were probably named trustee because the grantor had faith that you were up for the task. The duties of a trustee should not be taken lightly, but with legal assistance, it can be made easier. An experienced estate planning attorney will be able to advise trustees and the grantor in the creation of the trust and understand all obligations so that they can be well-informed before taking on the role. If you have questions about trust administration or would like to begin the estate planning process, call (270) 982-2883 for a free consultation.