So you’ve been named trustee of a trust… Now what?

By Attorney Bonnie Bowles, Denver Estate Planning Examiner

 If you’ve been asked by a family member of close friend to serve as the trustee of a trust, you should feel honored that the trust-maker feels confident in relying on your good judgment to undertake this important responsibility. But it’s very likely you have no idea what you have just said yes to.

Being a trustee means you are responsible for all the oversight and managements of the assets of the trust. If the trust-maker put conditions on distributions (such as a minimum age or a certain type of education), it is your duty to ensure a condition is met before a distribution is made. Some conditions can be pretty straightforward, while others—particularly tax-related conditions—are more complicated. These are just a few examples of what you may encounter as trustee.

In all cases, as a trustee, you have what is known as a fiduciary duty to the beneficiaries of the trust. in addition to the trust terms as laid out in the particular trust document which you must abide by, every state has laws you must follow in administering the trust.

Under state law a trustee’s duties include all of the following (among others):

  • Administering the trust according to its terms
  • Communicating with beneficiaries about the various activities of the trust
  • Investing and managing trust assets in a prudent manner
  • Accounting for and paying any taxes or fees
  • Distributing assets to beneficiaries as outlined in the trust
  • Making an accounting of trust assets, liabilities, receipts and disbursements to beneficiaries.

Also as a trustee, you may find yourself involved with the probate process at some point depending on how the assets were titled at the time the trust-maker passed away. If any of the assets of the estate were not properly transferred into the trust, this process can be overwhelming, especially if you do not have prior experience in this area.

Most states offer some basic guidance through public brochures published by the bar associations. You can find the Colorado Bar Association’s helpful piece here. These are a good place to start.

But thankfully, trustees may hire professional advisors to help them administer the trust and manage the assets. You don’t have to navigate the process alone. Engaging experienced legal help, investment advice, and other professional services is always the best option for trustees, as the trust is responsible for covering these types of fees.

Note from the author: If you are serving as the trustee of a trust (now or in the future), or you are a trust-maker yourself, consider seeking guidance on trust administration and planning for smooth administration of an estate. For the first two people who read and mention this article, we’ve reserved space on our calendars in November for a complimentary Family Wealth Planning Session (a $750 value) to spend up to two full hours gaining an understanding of the trust and estate process. Call 720-266-8190 today and mention this article.

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