At least one trust agreement is frequently found in a comprehensive estate plan. During the initial creation of a trust, the individual responsible for its creation, known as the Settlor, Grantor, or Trustor, must designate a Trustee. The Trustee is responsible for managing the trust assets and administering the trust using the terms created by the Settlor located in the trust agreement. If you were recently notified that you were appointed to be the Trustee of a trust, the thought of administering a trust can be daunting. It is always wise to consult with an experienced trust administration attorney when faced with the need to act as Trustee. To give you an idea what to expect, however, the Essex Junction attorneys at Unsworth LaPlante, PLLC explain what every new Trustee needs to know about trust administration.
Trust Administration Basics for the New Trustee
A Trustee’s overall job is to oversee the administration of the trust which includes a wide variety of duties and responsibilities. As a Trustee, you are in a fiduciary position, meaning that the utmost care must be taken to protect the trust assets. Moreover, all decisions made by a Trustee must be made with the best interest of the beneficiaries as the number one consideration. An important fact to understand as a new Trustee is that a Trustee can face personal liability for mistakes made while administering a trust. This is yet another reason to make sure you understand what is required of you and you take your position seriously.
Trust Administration Tips
In a perfect world, your appointment as the Trustee of a trust did not come as a surprise; however, if you were surprised by your appointment, you are hardly alone. All too often Settlor’s appoint someone to be the Trustee of a trust they create under the assumption that the appointed Trustee is willing and able to serve. Whether you knew in advance or not, the prospect of acting as Trustee may seem a bit overwhelming. The following tips may help:
- Understand the trust agreement. Understanding the trust terms is crucial. Read through the trust agreement several times because a clear understanding of everything in the trust agreement is essential to successfully administering the trust.
- Seek assistance from professionals. It is in your best interest to consult with professionals, such as an attorney and a financial advisor, to ensure that you understand all the terms and your obligations as the Trustee and to discuss your role as an investor.
- Transfer assets into the trust as soon as possible. If the Settlor recently passed away, assets may need to be transferred into the trust from the Settlor’s estate. The trust terms should provide guidance as will an attorney.
- Take stock of the trust assets by creating a comprehensive inventory. Keep track of what the trust owns, where the assets are situated, and their current valuations. Regularly update this inventory to reflect any disbursements, sales, or acquisitions of assets within the trust.
- Establish a dedicated bank account promptly. Since a trust is recognized as a distinct legal entity for tax purposes, it’s crucial to open a bank account immediately to facilitate trust-related transactions.
- Initiate contact with the trust beneficiaries. Introduce yourself and inform the beneficiaries that you will be overseeing the trust administration. As the Trustee, one of your ongoing duties is to maintain open communication with beneficiaries, ensuring they stay informed about significant trust matters.
- Implement an organized recordkeeping system. Thoroughly document every action taken as the Trustee. This not only serves as a protective measure in case of challenges to your decisions but also streamlines the process of ensuring fair compensation for your efforts in administering the trust.
Do You Have Additional Questions about How to Fulfill Your Role as Trustee?
For more information, please attend one of our upcoming FREE webinars. If you have questions about trust administration and your role as Trustee, contact an experienced Essex Junction trust administraton attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.