The Trustee’s Role

The Trustee

The trustee’s primary job is to carry out the intent of the creator of the trust as defined in the trust agreement and by state law. These are the rules the trustee must follow. The overriding goal should be to create a positive outcome for the beneficiaries while following the terms of the trust.

Learning to be a trustee, adjusting to family needs and conflicts, and dealing with a variety of assets and ever-changing tax laws, takes time and patience and is not for the faint of heart.  Keys to a successful administration include following the trustee’s fiduciary responsibilities, making proper investments and distributions, reporting to the beneficiary, and tax management.

The Trustee’s Role

Once considered to be an honor, the trustee’s role in a family’s estate plans has multiplied in complexity and intensity. Whether the individual is the initial trustee or a successor trustee, the role may be a surprise, with immediate responsibilities thrust upon the trustee with no warning.  It can be a precarious position and “learning is on the job.”

The trustee is the legal owner of the trust assets and is responsible for the investment of the assets, for following the terms of the trust and the state’s trust laws, reporting trust transactions to the beneficiaries, separating trust accounting income and principal, and insuring that proper trust tax returns are timely filed. If the trustee has discretion over distributions from the trust to the beneficiary, the trustee must follow the terms of the trust, whether clear or vague.

While the trustee may hire agents to assist in their responsibilities and is not a guarantor of success, beneficiaries may have unrealistic expectations, and, of course, the advantage of hindsight. Legal fees, whether paid by the beneficiaries, personally by the trustee, or funded by the trust, can be significant, sometimes even exceeding the amount in dispute. The “honor” of being a trustee can turn into a nightmare.

Sadly, there are few courses or books on the subject.  Many expound at length on “fiduciary” responsibility and theory, but are short on practical help in the daily administration of the trust.