Updated: Nov 5, 2021
By Derek L. Graham
"What do I have to do?"
This is the most common question we hear when meeting with an individual who - as the result of a family member or friend’s death - has been thrust into the position of being a Trustee. There is a flood of emotion that comes with that position. I find that most of the time, there is a sense of urgency to learn what needs to happen and when - because there is a deep sense of responsibility and desire to “get it right." Here at RRPG, we take a lot of pride in helping Trustees “get it right” and know they can proceed with confidence in fulfilling all of their duties.
To start, a Trustee is simply a person who acts as a custodian for the assets held inside a trust. If you think of a trust as a basket, then the Trustee is responsible for managing everything that is in the basket. The duties and responsibilities of a Trustee are largely driven by what the trust document says.
When a person passes away or becomes incapacitated and it is time for someone else to take over, that is when we encourage that person (often called a "Successor Trustee") to come in and meet with us for Trustee School.
I find that just one hour of meeting with us allows us to instill confidence in the mind of the Trustee, while also assuring that individual that we are here to help if unforeseen challenges arise.
During Trustee School, I cover the following areas:
Identify the type of trust and the purpose/objective of the trust
The primary responsibilities and duties of the Trustee
When to distribute money from the trust and when to not distribute money from the trust
Determine if other professionals need to be engaged (i.e. accountant, financial planner, etc.)
The things a Trustee cannot do, and best practices to ensure success
Other specific questions or concerns the Trustee may have
In addition to covering these areas, we walk through the all the necessary steps. Normally this starts with making sure we have the right documentation in place confirming and memorializing the change in Trustee. Next, we look at what is in the trust or possibly what needs to be transferred into the trust. It is critical that a Trustee make sure all necessary assets get placed/transferred into the trust in a timely manner.
Once in the trust, we talk about how to manage/invest/spend the money. It is important that the Trustee understand that they cannot mix trust assets with personal assets and the trust funds cannot be used for the Trustee’s benefit (unless the trust specifically authorizes it.) Finally, record-keeping, tax-reporting and accounting to the beneficiaries is critical.
We all get nervous when we do something for the first time.
Frankly, I am more concerned with the situations where a Successor Trustee is not nervous and has no questions. The fact of the matter is, if you are a Successor Trustee, then that means the individual who passed respected and trusted you enough to put you in a fiduciary position of great responsibility.
It is an important job, but it does not have to be a confusing job.
If you are the Trustee of a trust and have questions, doubts or concerns about whether you are doing your job correctly, do not hesitate to call us at 614-760-1801.