When it comes time to administer a trust, the person appointed as the Trustee is responsible for doing so. I am sometimes surprised to have a client tell me they had no idea they were appointed to be the Trustee of a trust. They’ve come to me to seek our advice on administering the trust; however, they begin with the question, “do I really have to do this?” Are you obligated to accept the job as the Trustee of a trust. The answer to this is easy and simple: no. Ultimately, you cannot be forced to act as the Trustee regardless of being appointed in the trust agreement. Before you make this decision it is best to discuss your options with an experienced attorney before making your decision.
Trust Basics for the Beginner
Most trusts are best understood as a separate legal entity that owns and holds property for the benefit of one or more beneficiaries. A trust is created by a Settlor, also referred to as a Grantor, Trustor, or Maker, who transfers property to a Trustee appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries. Some trusts are defined in free standing Trust Agreements. Others can be testamentary trusts, that only arise after the Settlor’s death and might be “subtrusts” defined by language in a Living Trust Agreement or discussed in a Last Will and Testament.
What Are the Duties and Responsibilities of a Trustee?
In general, a Trustee is responsible for administering the trust. Some common things a Trustee might be required to do include:
- Understanding and abiding by the trust agreement. A “trust agreement” is the legal document created when a trust is established. The terms of the trust agreement govern the administration of the trust and must be followed by the Trustee as they are written unless a term is illegal, impossible, or unconscionable.
- Adhering to applicable laws and understanding financial concepts. A Trustee must understand and abide by the laws that govern trust administration which much easier to do with a legal background. By the same token, a Trustee must manage and invest the trust assets in a prudent manner. It is essential for a Trustee to be responsible, helpful for them to be well organized, and if they do not have the applicable legal of financial experience (which is not uncommon) they need to be comfortable and adept and soliciting and receiving professional advice from those who do. In fact, they need to be pretty good and understanding the difference between advisors who know their stuff and those who do not.
- Recordkeeping. A trust is a separate legal entity. As such, the trust needs a separate bank account that will be used to pay trust expenses. The Trustee must keep detailed records of all trust business. In addition, the Trustee must pay the trust debts and keep track of debts owed to the trust.
- Communicating with the trust beneficiaries. Trust beneficiaries have several rights, including the right to be kept apprised of all important trust business. Often, this is the first time a beneficiary has been involved in a trust, meaning the beneficiaries may be feeling just as overwhelmed and uncertain as the Trustee. In this case, the Trustee’s job requires a bit of “hand holding.”
What If I Do Not Want the Job of Trustee?
The person who appointed you to be the Trustee of his/her trust clearly had considerable trust in you and confidence in your ability to successfully administer the trust. That does not mean, however, that you are legally (or morally for that matter) obligated to accept the appointment. You can always decline to act as the Trustee. If the trust was properly drafted, the Settlor should have named an alternate Trustee who will take over once you decline to serve. A court can always appoint someone if a successor Trustee was not named in the trust agreement. Given the important nature of administering a trust, it is not something you should undertake if you are unwilling to do so.
Contact Durham Trust Lawyers
If you have additional questions or concerns regarding your options after learning you were appointed to be the Trustee of a trust, please contact the Durham trust lawyers at Clarity Legal Group by calling us at 919-484-0012 or contact us online.
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