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Trust Administration: Understanding the Duties and Responsibilities of a Trustee

If you are considering nominating someone to act as a trustee for your living trust or someone has asked you to be the trustee of their trust, you need to understand the duties and responsibilities of a trustee. When you serve as a trustee, you need to know what you are supposed to do so that you fulfill your obligations and do not get sued by the beneficiaries of the trust. 

If you are evaluating a candidate to serve as a trustee of your living trust, you can more easily analyze the fitness of a particular individual if you know what they will have to do in the position. Someone might be a wonderful person in general but hopeless at serving as a trustee. A Texas estate planning attorney can help you fulfill your duties as a trustee or give guidance to a trustee whom you select for your living trust.

The Trustee Must Follow the Instructions of the Trust Document 

Some people think that when they get named as the trustee of another person’s trust, the assets of the trust belong to them. They ignore the instructions of the trust, or the portions that they do not like. A trustee like this might give preferential treatment to one beneficiary over the other.

Because trusts usually do not get filed in court, they enjoy a certain amount of privacy that a will does not have. This privacy, however, does not mean that the trustee can refuse to give a copy of the trust to the beneficiaries. The beneficiaries will not be able to find out if the trustee is carrying out their duties properly and not stealing from them if they cannot ascertain the contents of the trust document.

A Trustee Has a Duty of Loyalty to the Trust and the Beneficiaries

The beneficiaries also have the right to know additional things, like:

  • The steps the trustee has taken in managing the trust, 
  • The assets contained in the trust, 
  • The expenses the trust incurred, 
  • The debts of the estate that the trustee paid out of trust assets, and
  • All distributions paid to the beneficiaries out of trust assets.

The trustee must make full disclosure of the affairs of the trust to the beneficiaries. Other duties of the trustee include the following:

  • Preserving and protecting the assets of the trust. For example, if one of the trust assets was rental apartment property, the trustee will have to arrange to keep the property well-maintained and in good repair. They can hire a property management company to handle these tasks and the many other functions of having rental property.
  • The trustee must avoid all financial conflicts of interest with the beneficiaries of the trust. The trustee is entitled to reasonable compensation for their services, but may not receive a personal gain in excess of reasonable compensation.
  • The trustee must keep an accurate accounting of the trust assets and share that report with the beneficiaries.

A Texas estate planning attorney can help you set up a trust that can meet your goals and needs. For help with your case reach out to our office today.