question.jpgIn Trusts and Estates

What are the trustee’s duties?

Once the trustee has agreed to act as the trustee and has formally accepted the position (which may require the taking of an oath and/or the posting of a bond), the trustee must register the trust with the court. This generally means simply filing a statement with the court which identifies the trust and indicates that the trustee has accepted his or her duties and obligations. Following this, the trustee needs to find the property that is the subject of the trust, take control of the property (including any relevant documents, like deeds or contracts) and take steps to protect it (locking valuables in safes or safe deposit boxes, getting insurance, etc.). In doing this, the trustee must ensure that the trust property remains separate from any property outside of the trust. For example, if the trust property is some amount of money, that money needs to go into its own accounts, not into accounts with unrelated money.

Once the trust property is taken care, the trustee must determine who the beneficiaries are, identifying them, locating them and letting them know about the trust. For smaller trusts this is often an easy thing, but it can be more difficult for larger trusts (such as where the trustee is an institution that does not have a personal relationship with the beneficiaries).

In terms of administering the trust, the trustee is a fiduciary of the trust, meaning that he or she has to exercise a high degree of care when dealing with and managing the trust property. The trustee also has a duty of loyalty, meaning he or she must act loyal to, and in the interests of, the trust and the beneficiary’s interest in the property. This obviously means that, at a minimum, the trustee must follow any instructions left by the settlor (the person who set up the trust) regarding how the trust should be managed. It also means that the trustee must be careful in doing things like making purchases involving trust property, and must defend any claims against the trust that the trust is invalid.

With regard to any transactions the trustee makes involving the trust property, the trustee must keep accurate records and provide these records to the beneficiaries. These records, known as accountings, should be given to the beneficiaries on a regular basis to keep the beneficiary reasonable informed. Some states mandate how often this needs to be done (such as once a year), and the trust itself may contain provisions regarding how often the trustee must provide such an accounting to the beneficiaries.