Who Can Be a Trustee?
- A trustee can be an individual, corporation, or association.
- Trustees can serve in the capacity of sole trustee, co-trustee, or successor trustee.
- When naming a trustee, it’s important to consider the complexities of the trust and whether the trustee you select has the time, knowledge, expertise, objectivity, and desire to assume the important responsibilities that accompany this role.
Many individuals choose to name a corporate trustee with the ability to serve as a regulated, impartial third-party with the professional experience and broad resources to manage even the most complex situations.
Responsibilities of the Trustee
The trustee’s role is to administer and distribute the assets in the trust according to your wishes, as expressed in the trust document.
- Trustees have the fiduciary duty, legal authority, and responsibility to manage your assets held in trust and handle day-to-day financial matters on your behalf.
- They are required to perform a broad range of duties from making difficult decisions and judgments related to distributions and legal interpretations, to recordkeeping, reporting, accounting, initiating transactions, managing trust assets, filing taxes on behalf of the trust, and more.
There are three primary elements to the trustee’s role:
Administration
The trust administration role is central to carrying out your wishes regarding the use of assets in the trust.
- The trustee carries out your directions and follows your guidelines in handling the specific circumstances of each request for funds from trust beneficiaries.
- This involves legal interpretation of the language in the document, appropriate input from family members, and conformance with appropriate and applicable state trust codes.
- Experienced and unbiased trust administration and record keeping are vital components to implementing your plan.
- Day-to-day relationship management is also handled by your trusted financial advisor.
Asset Management
The trustee is ultimately responsible for the preservation and investment of assets in the trust for all classes of beneficiaries, ensuring that invested assets are productive and managed appropriately given the trust’s objectives.
- The trustee has the legal responsibility to reassess the objectives of the trust and current market conditions to be sure that the investments match those objectives.
- Many trustees will often hire professional managers to handle the day-to-day specialized activities such as investment management.
- Day-to-day investment management is delegated to your trusted financial advisor.
- The trustee also oversees the preparation of appropriate tax returns and all of the trust accounting in compliance with complex state and federal laws.
Custody
The custodial role is that of a financial secretary and security guard. The institution must identify and then take title to the trust’s assets, keep accurate records, report to the current beneficiaries, execute and settle all transactions, protect and insure the property and defend the trust against claimants.
Learn more about the benefits of Choosing a Corporate Trustee.