One of the most important decisions that you will make when creating your revocable living trust is selecting the right Trustee. A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also called a Settlor or a Grantor, who transfers property to a Trustee. The Trustee holds that property for the trust beneficiaries. The beneficiary of a trust can be an individual, an entity (such as a charity or religious organization), or even the family pet.
Trustee Duties and Responsibilities
The primary reason why people often appoint the wrong person to be their Trustee is the simple fact that they don’t really understand the varied and complex duties and responsibilities of a Trustee. The overall job of a Trustee is to administer the trust and manage the trust assets. Specifically, however, the duties and responsibilities of a Trustee are numerous and may include:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Prudently investing trust funds
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Accounting to trust beneficiaries
- Distributing trust funds to beneficiaries
- Making discretionary decisions
- Approving or denying distributions, if given discretionary authority
- Keeping detailed trust records
- Preparing and paying trust taxes
Appointing a Trustee
A Trustee is a fiduciary role, meaning the Trustee must maintain the highest standards of care in fulfilling its duties. The Trustee is bound ethically to comply with the terms of the trust, and to act in the best interests of the trust beneficiaries. It also means that the Trustee must be capable of remaining neutral when conflicts among beneficiaries arise or when making discretionary decisions relating to the distribution of trust assets. In order to fulfill this fiduciary duty successfully, a Trustee must have an understanding of applicable trust laws, as well as how those laws interact with the trust’s provisions. The Trustee must also have a grasp of financial concepts, rules, and procedures to help ensure prudent management of trust assets.
Contact a Phoenix Trust Administration Attorney
For all of these reasons, it is important take all the time necessary before choosing your Trustee. If you have additional questions or concerns about appointing a Trustee, contact Morris Hall PLLC by calling 888-222-1328 to schedule a free consultation.