Whether you have been named as a trustee or successor trustee, or you are thinking about who to name in this important position in your estate plan, it is critical to understand the roles and responsibilities.
A trustee needs to start by understanding the purpose of the trust. This written agreement involves transferring property to another person or people, the trustee, who is then responsible for managing that property for the gain of another individual or individuals, known as beneficiaries. Usually, someone creating a revocable trust may name themselves as the first trustee and beneficiary during their lifetime.
The second step is to understand the details of the job. A trustee must not only manage trust assets but distribute them in accordance with the directions outlined in the trust document. Since trusts can vary in the level of complexity and type, the day-to-day responsibilities of a trustee may look different. Be prepared for possible challenges with beneficiaries, such as disagreements among them, or the responsibility of providing updated accountings or documents related to the actions you have taken.
In some cases, a trust may take longer to distribute than you expect. Some distribution tasks take about six months, where in other situations, the term may stretch much longer. If you are expected to administer what is known as an ongoing trust for young adults or children, then there is more work involved.
It is also important to recognize there are risks of serving as a trustee or successor trustee. Identification of assets can involve a significant amount of time as investigative work takes over your schedule. One of the biggest risks associated with serving as a trustee is working with the beneficiaries. If you do not have an established good relationship with the beneficiaries to start with, it is unlikely that this will improve automatically when you are put in a position of power.
