If you were recently informed that you are the Trustee of a trust, and this is the first time you have served as a Trustee, you may not know where to begin or exactly what your duties and responsibilities as a Trustee will be. Unfortunately, people often appoint a spouse, friend, or family member as the Trustee of their trust without discussing the appointment with the prospective Trustee ahead of time. Consequently, it is not unusual for a new Trustee to feel a bit overwhelmed. Specific questions should be directed to an experienced trust administration attorney in person; however, to get you started, the attorneys at the Law Offices of Kobrick & Moccia have provided the following Long Island trust administration tips.
What Is a Trust?
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. Most people enter into trust agreements on a daily basis without realizing it. For example, imagine that you ask your sister Beth to hold onto some family heirlooms you have and to then give them to your niece and nephew when they reach age 25. You have created a trust wherein you are the Settlor, Beth is the Trustee, and your niece and nephew are the beneficiaries of the trust. In addition, the family heirlooms are the trust assets and your directions to hold onto them until the beneficiaries reach age 25 the trust terms.
What Role Does the Trustee Play?
The Trustee of a trust serves two primary functions – managing trust assets and administering the trust terms. The duties and responsibilities of a Trustee, however, are numerous and varied and include things such as:
- Communicating with beneficiaries
- Settling disputes among beneficiaries
- Keeping trust records
- Preparing trust taxes
- Investing trust assets
- Distributing trust assets
- Abiding by trust terms
Tips to Help with Long Island Trust Administration
If you find yourself as the Trustee of a trust for the first time, the responsibilities you have likely feel a bit daunting. The following tips may help you with your trust administration duties:
- Consult with an experienced estate planning attorney immediately. Ideally, the Trustee of a trust will have a legal background. If you do not, the most important thing you can do as a new Trustee is to consult with an experienced estate planning attorney. Most Trustee’s retain an attorney to assist them with their duties to ensure that those duties are carried out without making costly mistakes.
- Read the trust agreement carefully. The terms of the trust agreement govern the trust and must be followed exactly unless a term is illegal or unconscionable.
- Organize your duties and responsibilities. The job of Trustee involves a wide variety of very different tasks and responsibilities. To keep track of all of them, and to help with your recordkeeping duties, set up an organizational system right away.
- Create a system for recordkeeping. This is extremely important and will help ensure that you are never held personally liable in your position as Trustee. Make sure all important trust business is reduced to writing and keep copies of everything in some type of organized filing system.
- Consult with a financial advisor if you do not have experience in the field. Most Trustees are required to invest trust assets. When investing trust assets, you are bound by the “prudent investor” rule. If you are unfamiliar with this rule and/or have no financial planning experience, it is in your best interest to consult with a financial advisor early on in your job as Trustee.
Contact Our Trust Administration Attorneys
For more information, please download our FREE estate planning worksheet. If you have questions or concerns about trust administration, or you wish to consult with a trust administration attorney regarding your role as Trustee, contact an experienced Long Island trust administration attorney at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.