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What do I need to do as a Trustee of a Trust?

When a client retains our office to draft a Trust, a Trustee must be chosen. But the client may want to know before choosing a person, what will a trustee be responsible for. The person appointed as trustee may wonder the same.

First, it is important to know what a trust is. A trust is an estate planning tool that protects assets from creditors, is private, and can avoid probate. A revocable living trust transfers your assets while you are still alive. The trust owns the assets, but you can use them while you are alive. When you pass away, since the assets are in the trust, the Probate Court does not get involved.

There are different types of trust:

  • Testamentary (This is done in a will after someone dies.)
  • Irrevocable (This trust usually does not change.)
  • Revocable Living Trust (Most common used to avoid probate.)

It is also important to know the parties that are involved in a trust:

  • Grantor– Person who set up the trust.
  • Trustee– Manager of the assets that are in the trust
  • Successor Trustee– A back-up trustee in case the trustee is not able to serve
  • Beneficiaries –Persons or organizations who will receive the assets after the grantor has passed

So now that you are familiar with different types of trusts and the parties who are involved in the trust, now what are the responsibilities that a trustee has. A trustee does not become involved until the grantor no longer has capacity or dies. At that time, the trustee must:

  • First and most important, follow the instructions of the trust.
  • Not mix the assets of the trust with your own assets. Keep financial accounts separate.
  • Does not benefit from the trust unless the trustee is a beneficiary in the trust.
  • Only give the beneficiaries what they are granted in the trust.
  • May invest the assets in a prudent investment that will result in growth with a small amount of risk.
  • Keep accurate and detailed records of assets and distributions
  • File all required tax returns
  • Provide documentation as requested to beneficiaries

With the help of an experienced estate planning attorney you will be a successful trustee.

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