What Are a Trustees’ Real Responsibilities?

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It may seem like a default to name your oldest responsible child or your spouse as the trustee of an established trust. However, trust administration may require many different tasks and can be overwhelming or something that neither of those parties want to take on. The primary duties of a trustee include management, investment, collection and distribution of assets inside the trust. If you choose to use a trust as part of the planning for your Virginia estate, it’s wise to make sure you talk it through with an estate lawyer first to make sure you understand the benefits and the importance of selecting a trustee.

The trustee must follow the trust agreement itself, meaning that they need to be familiar with this document and must also be prepared to keep detailed accounting records about what they did with regard to managing the trust. Another key trustee consideration is their ability to communicate effectively with beneficiaries. Many trust disputes relate to lack of communication between a trustee and the trustees’ beneficiary.

Trustees must also be aware of potential tax implications, which is one reason why some people choose to hire a professional trustee rather than giving this responsibility to a family member. Depending on the trust’s type and situation, a tax return may be required for the trust itself as well as a federal estate tax return when a person passes away. Furthermore, a trustee will also need to prepare a form 1040 final income tax return as well. In many cases, a trustee may be eligible to hire outside assistance to help with these aspects of planning.

What a Trustee Needs to Know About Making Final Distributions to Beneficiaries

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Although beneficiaries of a trust will naturally have questions earlier on in the process, the concept of when they’ll receive their check or the assets set aside for them usually needs to be answered later on. Making distributions of remaining trust assets comes at the end of the process when a trustee is settling a revocable living trust.

This is because the successor trustee has to ensure that every single expense and fee associated with administering the trust or the related probate estate have been settled and that all taxes have been paid or money has been set aside to pay those final taxes and bills. If the trustee chooses to make distributions to the beneficiaries and expenses come up down the line, that person will then have to pay those expenses out of their own pocket.

If it is anticipated that the administration of the decedent’s trust will take longer than 12 months, the successor trustee might need to reach out for additional resources, such as hiring a trust attorney and an accountant.

This can ensure that enough assets are appropriately set aside to pay ongoing expenses of the trust and then allow for those final important distributions to be made to the beneficiaries of that document. Schedule a consultation today with a trust planning lawyer in Virginia Beach to learn more.

How Should I Choose My Trustee?

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You know that a trust empowers you to accomplish a broader range of your estate planning goals, but a trust is only helpful as a tool when it’s been funded the right way and is managed by a knowledgeable trustee.

It’s an important decision to select the person who will be responsible for managing your trust on your behalf.

Depending on the kind of trust that you create with the help of your estate planning lawyer, the trustee will oversee the assets and the assets that will ultimately belong to your loved ones. Many people immediately default to choosing a family member or a friend as a trustee, but it can also make sense to choose a professional trustee, such as an accountant or an attorney.

One of the most important things to take into consideration as you select the person to serve in the trustee role is their individual traits. It goes without saying that a trustee should be trustworthy. He or she should also have a background in understanding your individual goals in creating the trust and what you hope to pass on or give to your family members as a result of establishing this estate planning vehicle. This person should also have some experience with financial management or handling legal instruments and documents, such as a trust.

Because this person will be so intricately involved in the management of your affairs when you are no longer around to dictate what that looks like, you need to feel confident in his or her ability to step in and manage them. Furthermore, the trustee that you select for your estate should be good with money and financially astute.

Make sure that you have an individual conversation with those people that you are thinking about appointing as a trustee so that they understand the roles and responsibilities and are comfortable serving in that manner.  For more help, contact our Virginia Beach law office today.