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5 Steps to Take as a Newly Appointed Trustee

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Did you recently learn that you were appointed to be the Trustee of a trust? If so, and this is the first time you have served as a Trustee, you are probably feeling overwhelmed and wondering where to begin. While the trust administration process is unique to every trust, there are some common steps. To provide you with some guidance as a first-time Trustee, the Essex Junction trust administration attorneys at Unsworth LaPlante, PLLC offer guidance for the newly appointed Trustee.

Trust Basics

If you are unfamiliar with trusts, it helps to learn some basics. A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also referred to a Trustor or a Grantor, who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are broadly divided into two categories – testamentary and living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. A living trust, as the name implies, activates during the Settlor’s lifetime. Living trusts can be further sub-divided into revocable and irrevocable living trusts.

Steps to Take

The overall job of a Trustee is to manage and invest trust assets and administer the trust according to the terms created by the Settlor. Among the most common reasons for a trust to fail is a Trustee who is ill prepared for the wide range of complex duties and responsibilities required of a Trustee. I you find yourself the Trustee of a trust, the following are steps you should take immediately upon learning of your appointment:

  1. Read through the trust agreement. All trusts are governed by the trust agreement used to create the trust. As the Trustee, you should read through the trust agreement several times to ensure that you understand the main points of the document. The agreement should include the trust purpose as stated by the Settlor. All decisions you make should keep be made in furtherance of that purpose. The agreement may also provide you with guidance regarding how the trust assets should be invested.
  2. Consult with an experienced trust administration attorney. Administering a trust requires you to understand, and comply with, all applicable laws. Consulting with an experienced attorney is the best way to ensure compliance with those laws. The attorney can also help to clarify any questions you have about the trust agreement. Most Trustee’s retain an attorney to assist during the administration of the trust, if for no other reason than to protect against being held personally liable for mistakes made as the Trustee.
  3. Transfer assets into the trust. Often, assets owned by the Settlor still need to be transferred into the trust by the Trustee. The trust agreement may provide guidance, or you may need to consult with an attorney to determine which assets are intended to be used to fund the trust.
  4. Open a bank account and begin recordkeeping. Because a trust is a separate legal entity, you need to open a bank account to pay trust expenses. In addition, a Trustee must keep very good records of all trust business. Setting up a recordkeeping system early on helps to fulfill this trust administration responsibility.
  5. Communicate with beneficiaries.  As the Trustee, you are also required to keep beneficiaries apprised of trust business. With that in mind, it is a good idea to reach out to all the beneficiaries early on and let them know you will be administering the trust.

Contact Essex Junction Trust Administration Attorneys

For more information, please attend one of our upcoming FREE webinars. If you have additional questions or concerns about how to administer a trust, contact the experienced Essex Junction trust administration attorneys at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.

Stephen Unsworth
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