Understanding the Role of a Trustee
What is a Trustee?
A trustee is a person who acts as a custodian of the assets held in a Trust. Here are two key terms:
- Primary Trustee: The creator of the Trust acts as the Primary Trustee until they pass. This means you have full control of all assets transferred to your Trust. After the Primary Trustee's death, the designated Successor Trustee(s) will take over to administer and distribute assets according to the terms of the Trust.
- Successor Trustee: A Successor Trustee is appointed to manage the Trust if the Primary Trustee is unable to fulfill their duties. This typically occurs upon the Primary Trustee's death, ensuring the trust continues to operate smoothly and according to its terms, benefiting the designated beneficiaries.
Choosing a Successor Trustee:
You can select anyone over 18 to be your Successor Trustee, and you can choose more than one person at the same time. You can even name someone who is also a Beneficiary or Guardian. However, this is not mandatory. If you prefer, you can choose a lawyer or a professional company to be your Trustee, but this is not necessary.
What does a Trustee do?
A Trustee is responsible for managing a Trust's assets, ensuring they are handled according to the trust document's terms for the benefit of the beneficiaries. Key responsibilities include:
- Asset Management: Safeguarding and prudently investing trust assets.
- Record Keeping: Maintaining accurate records of all trust transactions.
- Beneficiary Distributions: Distributing assets to beneficiaries as specified by the trust.
- Financial Reporting: Providing detailed accounting and financial reports to beneficiaries.
- Decision Making: Making complex financial and investment decisions, often requiring consultation with legal and financial professionals.
The Evolving Role of a Trustee:
Initially, if you create a trust, you might act as both the Primary Trustee and the Beneficiary, giving you considerable flexibility in managing the trust. However, after your death, the Successor Trustee may need to give legal notices to Beneficiaries, make accounting and tax decisions, and potentially deal with courts. Many Trustees hire an attorney and/or an accountant to assist with these decisions.