Named As A Trustee And Wondering What To Do? Here Is A Checklist Of Duties To Get You Started

Maybe a friend or a relative has recently passed away and you just received a communication informing you that you have been named as a trustee. You have no idea what this role entails, and you feel overwhelmed having no prior experience serving as a trustee. 

Acting as a trustee is not an innate skill for a layperson and the role comes along with a number of responsibilities and duties. Each state may have specific duties and responsibilities that are unique to each state, so you should specifically check with an attorney in your area, but here is generally what you need to know to help get you started. 

  • Duty to Administer the Trust:  Upon acceptance of the trusteeship, a trustee shall administer the trust in good faith. 
  • Duty to Inform and Provide Trust Accountings: A trustee must keep qualified beneficiaries reasonably informed of the trust and its administration.  A trustee must provide each qualified beneficiary with a copy of the trust document and upon reasonable request shall provide the beneficiary with relevant information regarding the trust’s assets and liabilities.  Once the trust becomes irrevocable, the trustee has a duty to provide a trust accounting to each qualified beneficiary at least annually and on termination of the trust or change of a trustee.
  • Duty of Impartiality:  If a trust has two or more beneficiaries, then the trustee must act impartially and give due regard to each beneficiaries’ interests. In other words, a trustee cannot favor one beneficiary over another or favor a certain class of beneficiaries over another class. 
  • Duty of Loyalty:  A trustee has a duty to administer the trust solely in the interests of the beneficiaries.  A trustee is prohibited from self-dealing and must place the beneficiaries’ interests above their own.  A trustee must keep all trust property separate from the trustee’s own property. 
  • Protection of Trust Property:  A trustee has a duty to take reasonable steps necessary to protect the assets of the trust for the benefit of the beneficiaries.  This includes a duty to use best efforts to make trust property productive of income. 
  • Duty to Prudently Manage Trust Property:  A trustee has a duty to take all reasonable steps to control and protect trust property.  A trustee has a duty to invest and manage the investments of trust property as a prudent investor would do.  With an individual trustee this usually means hiring an investment advisor to assist you with making prudent investment decisions regarding the trust property

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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