Introducing the Trustee Toolkit: A Must-have for Successor Trustees
What do you do when someone close to you makes you their trustee? What are your duties and responsibilities? How do you manage your family or close friend’s trust and administer it according to their wishes? Rilus Law’s Trustee Toolkit is our answer to these questions. We put together this collection of free resources to help you navigate the role of successor trustee. Keep reading to learn the essentials of being a trustee and more about the Trustee Toolkit.
Trustee vs. Successor Trustee
To fully understand a trustee’s role, let’s first define some terms. We may use the terms ‘trustee’ and ‘successor trustee’ interchangeably in this post, but they hold slightly different meanings. When a person creates a trust, they become the trustor, sometimes also called grantor or settlor. The trust also requires the naming of a trustee, a person who will act as the custodian of all the assets held by the trust.
Often, the trustor or creator of the trust is also the trustee until they die or can no longer perform the role’s duties and responsibilities. Thus, the trustor must also name a successor trustee who will take over the role of the trustee upon their death or incapacitation. The roles of the trustee and successor trustee are generally the same because how a trust is managed is bound by the terms of the trust.
What is a Successor Trustee?
The trustor can choose an individual, an independent third party, or a company to serve as a successor trustee. Both companies and independent third parties generally have high fees for their trustee services, but they bring a lot of trust administration expertise to the table. So, most trustors will choose a family member, close friend, or loved one as their successor trustee. The upside of going for this option is having someone they know and who knows them. Thus, the trustor can have peace of mind and trust that their trustee understands their personal wishes.
The downside is that the person they choose may not be up to the task and lack the experience to deal with the complexity of the trust. Many successor trustees in this position attempt to handle the process on their own, relying only on piecemealed information from Google to guide them. We believe that any trustee, whether our paying clients or not, should have access to the basic support they will need in performing their duties and responsibilities.
What Do Trustees Do?
If someone close to you considers you as their trustee or has already named you as one, it helps to know what you’re getting into before you commit to the role. Here are the general duties and responsibilities that the trust expects you to perform:
Act as fiduciary.
This means acting on behalf of the trustor’s wishes and benefits, not yours. Once you accept the role, you are legally bound by a fiduciary duty to manage and administer the terms of the trust. If you fail to follow the standard of care required by fiduciary duty, even if you didn’t have ill intentions, you can be held personally liable.
Administering a trust comes with tremendous responsibility and liability. We share this because we often have clients come to us halfway through the trust administration process with pending beneficiary lawsuits, creditors breathing down their necks, and/or excessive and unexpected gift taxes.
Safeguard the assets.
This duty involves a thorough knowledge of the assets held in the trust as well as the beneficiaries and their rights. To perform this duty may also require you to perform accounting and evaluation of funds and assets regularly.
Communicate with beneficiaries.
The trust connects to its beneficiaries through the trustee. You must keep in contact with beneficiaries to answer their questions and update them on any relevant trust information. This can include sharing status updates, accounting, and beneficiary distribution schedules.
Keep records of transactions.
Trust asset management involves keeping track of transactions and filing them for future reference. You must have an organized method of filing these records to prevent loss and errors.
File reports.
Trustees are also responsible for filing reports for tax and other regulatory requirements by your state or the federal government. Failure to file the necessary reports may result in fines and other penalties.
Make decisions.
As a fiduciary, the trustee may need to make decisions about the trust. Examples of such decisions are when to distribute benefit payments, where to invest, or whether to provide additional distributions. You must use your discretion when faced with such decisions, keeping in mind the trustor’s wishes.
Carry on a legacy.
The most important thing to remember is that this is not just about paperwork; it's about your ability to serve your loved ones and uphold their legacy. But, you take on real liability as a successor trustee, so it’s vital to do everything by the book. That’s why we’re here to help successor trustees step into this journey armed with knowledge. At Rilus Law, we stand resolute in our commitment to empower not just our esteemed clients, but every individual who seeks knowledge and support in our area of practice. We firmly believe that this empowerment is the cornerstone of a brighter future.
What’s in the Trustee Toolkit?
With the varied duties and complicated terms involved in managing trusts, expect your role as a trustee to get overwhelming from the get-go. This is why we came up with our Trustee Toolkit. With it, any first-time successor trustee, or even an experienced one, can have a starting point and a practical game plan to go about their role. This toolkit contains all the essential resources, complete with email guidance and detailed walkthrough videos, you need to be an efficient and effective trustee, including:
Successor Trustee Acceptance Form - This is the form all trustees must complete and get notarized as legal proof of their role.
Detailed Trust Tax ID Form Walkthrough - To prevent confusion when filing for a trust tax ID number with the IRS, this is where our experienced team provides a walkthrough of the form and online process.
Trustee Checklist - This checklist consists of critical steps to help trustees keep track of their duties and responsibilities.
Trust Inventory Spreadsheet - This is our time-tested tool for gathering and storing trust information. Trustees will find this helpful and indispensable as a database or reference for anything trust-related.
Trust Distribution Schedule - This is a resource trustees can use to organize, plan, and track the trust distribution to beneficiaries. A trust distribution schedule is especially critical if the trust has complex assets, multiple beneficiaries, and complicated instructions.
With this FREE, all-in-one resource, you can easily and more accurately perform your role as a trustee. You can now fully commit to being your loved one’s trustee, and be confident that you can serve their wishes and protect their legacy. Click here to learn more or download the Trustee Toolkit.
For further questions or other concerns about your successor trustee duties, please feel free to reach out to us. Rilus Law’s trust and estate planning experts are always here to help. Give us a call today.