I Am Named as Trustee
Being named as a trustee comes with a lot of responsibility.
Generally, the individual that is creating the Trust will initially choose to be their own trustee. This is done because they best understand their current situation and how they wish for their estate plan to work. However, not everyone lists themselves as the initial trustee, whether it be for health concerns or for various other reasons.
If you are listed as someone else’s trustee or as their successor trustee it is important to understand their current situation and wishes. The role of a trustee may begin even while the Trust maker is alive and is an ongoing commitment.
The Role of Trustee
The main responsibility of the trustee is to manage the assets within the Trust. The trustee should be familiar with the Trust and its provisions to ensure that the assets are being handled correctly.
It is important for a trustee to keep accurate records and be well organized to best avoid problems. This will make their job considerably easier. For instance, precise record-keeping and thorough organization can help guarantee that the trustee does not mistakenly mix the Trust assets with their own assets, which would cause issues for both the trustmaker and the trustee.
As trustee, you have a duty to the beneficiaries to best manage the assets and may be required to report how the assets have been managed.
There is a lot that the trustee should know: who can receive distributions and how, why was the Trust created, how long does the Trust last, and are their specific stipulations?
The trustee’s duties can become overwhelming and often a co-trustee may be named to help with the responsibilities. Whether you are doing this alone or with a co-trustee, it is crucial to understand the Trust, what is expected, and what can or cannot be done.
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Terms for Trustees to Know
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Word |
Definition |
|---|---|
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Trustee |
The Trustee is the person who has control over the assets owned by the Trust. They may be the same person as the Trustmaker or someone else that was appointed to the role. They are a sort of “property manager” for the trust and are not necessarily the owner of the property. |
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Co-Trustee |
A Co-Trustee is someone that often has the same authority and responsibilities as a Trustee that would be otherwise acting alone. Their authority may be to act independently or may only allow them to act with the agreement of the other trustee(s). |
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Beneficiary Designations |
Beneficiary Designations are the tools that people often use to specify where they want certain accounts to go after they pass away. This can include terms like “payable on death” (POD) or “transfer on death” (TOD). Accounts or property that have these designations will transfer to the ownership of those listed after the death of the initial owner of that account |
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Probate |
Probate is the court process through which your assets are distributed following your death. Probate will only distribute your assets that are not otherwise controlled by a Trust or beneficiary designations. |
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Decanted Trust |
A Decanted Trust is a trust that is the recipient of assets from another trust. These are often used to create a stand-alone trust for a beneficiary after the original Trustmaker’s death. |
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EIN/TIN |
Employer Identification Numbers (EIN) and Tax Identification Numbers (TIN) are the numbers used in place of Social Security Numbers (SSN) for a Trust’s tax ownership. When you inherit an irrevocable trust, you will need an EIN or TIN for your trust so that any income generated by that trust will be properly reported to the IRS. |
