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Understanding the Role and Responsibilities of a Trustee

Published On - April 23, 2024

Stan Bennett Trusts

A trust agreement is often an integral component in a comprehensive estate plan. Trusts are powerful legal arrangements that allow individuals to protect and distribute their assets according to their wishes, both during their lifetime and after their passing. At the heart of every trust is a Trustee, a fiduciary entrusted with the management and administration of the trust assets. Serving as a Trustee puts you in a position of great responsibility and requires a thorough understanding of both the legal and ethical duties involved. To help you better understand, a Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains the role anddivorce lawyer responsibilities of a Trustee.

Understanding the Trustee’s Role

A trust is a legal relationship that allows assets to be held by a Trustee for the benefit of third-party beneficiaries. A Trustee is essentially the steward of a trust, charged with safeguarding its assets and executing its terms in accordance with the intention of the Settlor (the creator of the trust). The Trustee holds legal title to the trust property and manages it for the benefit of the trust beneficiaries. 

Key Responsibilities of a Trustee

Understanding the responsibilities associated with acting as a Trustee is essential if you have been appointed to fulfill the role of Trustee. Among those responsibilities are:

  • Fiduciary Duty: A fiduciary duty is at the core of a Trustee’s obligations. A fiduciary duty is a legal standard that requires Trustees to act in the best interests of the beneficiaries. This duty encompasses principles of loyalty, prudence, and impartiality, mandating trustees to manage the trust with the utmost care, diligence, and integrity.
  • Asset Management: One of the primary responsibilities of a Trustee is to prudently invest and manage the trust assets. This involves creating and implementing an investment strategy that aims to preserve and grow the trust corpus while considering factors such as risk tolerance, liquidity needs, and the beneficiaries’ financial goals.
  • Record Keeping and Accounting: Trustees are required to maintain accurate records of all trust transactions, including income, expenses, and distributions. Regular accounting reports must be provided to the beneficiaries, ensuring transparency and accountability in the administration of the trust.
  • Communication and Disclosure: Effective communication is essential in fulfilling the duties of a Trustee. Trustees must keep beneficiaries informed about the trust’s status, changes in investment strategy, and any other relevant matters. Moreover, a Trustee has a duty to disclose information reasonably necessary for beneficiaries to protect their interests.
  • Distribution of Assets: Depending on the terms of the trust, a Trustee may be responsible for making distributions to the beneficiaries. This could involve periodic payments, lump-sum distributions, or discretionary disbursements based on specified criteria outlined in the trust document.
  • Tax Compliance: A Trustee must ensure that the trust complies with all applicable tax laws and regulations. This includes filing tax returns, paying any taxes owed, and maximizing tax efficiency through strategic planning.
  • Legal and Administrative Duties: Trustees are also tasked with fulfilling various legal and administrative obligations, such as signing legal documents, maintaining insurance coverage for trust property, and adhering to state laws governing trusts.

Do I Need an Attorney to Help Me If I Am the Trustee of a Trust?

While serving as a Trustee can be a rewarding experience, it also comes with its fair share of challenges and considerations. It is always in your best interest to consult with an experienced trust administration attorney if you learn that you are the Trustee of a trust. Trust administration can be complex, especially for larger trusts or those with intricate provisions. You may encounter legal, financial, and administrative hurdles that require the assistance of an experienced attorney to navigate. In addition, disagreements among beneficiaries can arise that may require mediation to resolve. Finally, as the Trustee of a trust, you could be held personally liable for breaches of fiduciary duty or mismanagement of trust assets. To ensure that you do not face personal liability for errors or mistakes you make while serving as a Trustee, work closely with an experienced attorney.

Contact a Murfreesboro Estate Planning Attorney 

If you have been appointed to be the Trustee of a trust in Tennessee, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.

 

Stan Bennett
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